The impact of economic factors on housing prices. Case of Almaty city

Abstract

The real estate market in Kazakhstan is the sector that shows a noticeable increase in prices each year. This research work tries to identify which factors influence price changes. The analysis was carried out within the city of Almaty, based on the 6 chosen factors: volume of mortgage loans issued, average nominal income, USD/KZT exchange rate, price change in the construction sector, population, and the number of unemployed people. The work aims to distinguish the influence of the selected factors on the price per square meter, whether a middle-income family in Kazakhstan can afford an apartment in Almaty, and try to explain how prices are formed in the real estate market. The methodology of a project was chosen to be a quantitative research method and data for the analysis were collected from official statistical platforms. The regression model was tested using the ordinary least squares (OLS) method by using the STATA program. Based on the results of the analysis, 3 models were created for the period from 2011 to 2021. The first model showed that the number of unemployed people has a negligible effect on price growth, and in the second model, only prices in the construction sector and the USD/KZT exchange rate had a significant impact on price changes. With regards to the third model, the only independent variable included turned out to not have sufficient goodness of fit. The volume of mortgage loans and the number of unemployed people did not have a significant impact on the growth of housing prices in any of the models, while the average nominal income and population turned out to be significant only in the first model.