The nexus between equity markets and housing prices in Australia

External PersonnelKelly Burns, Steven Rowley
Research PartnersBankwest Curtin Economics Centre
Project FundingBankwest Curtin Economics Centre
Project StatusComplete (January 2016 to November 2016)

Project Summary

This report examines the impact of equity and energy prices (Standard & Poor’s Energy price index) on house prices across Australian capital cities and regional Western Australia. The purpose is to explore whether equities and energy markets are key house price drivers and whether any impact is dependent upon the extent to which the local economy is reliant on energy based resources. The research is a collaboration between CBS and RMIT. This research employs a dynamic model to investigate the short and long run impact of equity and energy prices on house prices. This is the first study to consider this dynamic relationship for key regional areas of WA, many of which are reliant on resource industry employment and investment. While equity prices were found to be a key determinant of house prices at the national and state levels there is no evidence that they impact house prices at the WA regional level. However, energy prices are a leading indicator of changes in house prices over the short run in most regions of WA.