ANALYSIS OF THE IMPACT OF MACROECONOMIC FACTORS ON REAL ESTATE PRICES IN BOSNIA AND HERZEGOVINA

Abstract

Economic theory and practice are not acquainted with any unique set of
macroeconomic factors that affect real estate prices. The very complexity of
this phenomenon relativizes any attempt to establish an unchanged list of
macroeconomic factors in BiH. The aim of the research in this paper is to analyze
the impact of selected macroeconomic indicators on real estate prices in BiH, in
the period from 2007 to 2019. Out of numerous macroeconomic factors that affect
real estate prices (real estate prices are viewed as: the value of construction works
done and as the value of new dwellings - new construction), 12 macroeconomic
factors were singled out: nominal gross domestic product, real GDP growth
rate, industrial production growth rate, GDP per capita, average net wages,
imports and exports, household deposits in commercial banks, interest rate
(housing loans, annual, %), loans to households, household final consumption
expenditure, gross fixed capital formation and government final consumption
expenditure. Starting from the hypothesis that macroeconomic factors affect
real estate prices, it has been concluded that the selected factors significantly
determine real estate prices and that most of the predictor variables defined in
the model are significant, in terms of impact on the movement of GDP and real
estate prices in Bosnia and Herzegovina in the period analyzed. The greatest
impact on real estate prices is by household final consumption expenditure,
GDP per capita, nominal GDP, interest rate, household deposits and real GDP
growth rate. The research used factor analysis (reduction of macroeconomic
factors to the optimal number of factors that explain the analyzed phenomenon
and its impact on real estate prices) and an extended multiple linear regression
model with a statistical software program SPSS, version 21. Modeling the impact
of macroeconomic factors on real estate prices has macroeconomic effects
and benefits for the country and contributes to the growth and well-being of
operators in the real estate market.