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Keywords

House Price, Urbanization, Lebanon, Granger Causality

Disciplines

Business | Real Estate

Abstract

The purpose of this paper is to examine the mutual relationship between urbanization and house prices in Lebanon for the period 1993-2017. The underlying argument of this paper is to examine whether house prices affect and is affected by the rate of urbanization. It argues that a significant rise of rural-urban migration can contribute to the rise in house prices. Similarly, a substantial rise in house prices can eventually limit rural-urban migration and slow down the pace of urbanization. In Lebanon, urbanization has increased at varying rates since 1993 and housing prices might have been affected by urbanization, or could, at the same time, might have affected urbanization growth in Lebanon. Although many papers investigate the effect of urbanization on the real estate market and housing prices, papers examining the mutual relationship between both variables are scarce. The Granger causality is used to explore the two-way relationship between urbanization and housing prices in five different areas of the capital Beirut. The preliminary evidence suggests that the rise in house prices in Beirut over the period 2007-2011 seems to have slowed down urbanization growth a mutual effect exist but that the episodes of large increase in house prices in Beirut are not determined by urbanization growth but speculative demand generated by non-residents.

ISSN

2664-9446

Included in

Real Estate Commons

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