COVID-19 pandemic and housing demand mortgage: Partial adjustment model approach

Authors

  • Fitri Juniwati Ayuningtyas Universitas Amikom Yogyakarta
  • Anggrismono Anggrismono Universitas Amikom Yogyakarta

DOI:

https://doi.org/10.12928/optimum.v14i2.9451

Keywords:

Housing demand mortgage, Partial adjusment model, Income, Loan interest rate

Abstract

One of the efforts to encourage the fulfillment of housing needs is the provision of housing both from the government and the private sector by considering the community's purchasing power. The background of this research is that the fulfillment of housing needs by both the government and the private sector has yet to be maximized while the demand for housing is relatively high. This research is still necessary because the demand for housing is still high. Increased housing demand will push house prices due to limited housing land. The problems faced focus on the relatively high demand for mortgages because even in the conditions of the COVID-19 pandemic, people still make houses their top priority. This study aims to analyze the effect of people's income, loan interest rates, the amount of housing finance, and dummy before and during the COVID-19 pandemic on housing demand mortgage. The data analysis technique in this study used multiple regression Partial Adjustment Model (PAM). The results showed that the variables of income as proxy for GDP and loan interest rates significantly affected housing demand mortgage. In contrast, the amount of housing finance and the COVID-19 dummy had no significant impact. The research implication that researchers can provide to the government is to provide policy recommendations regarding the  Housing Finance Liquidity Facility (FLPP) program, which is intended for low-income communities.

References

Akinaga, T., Kudi, T., & Akai, K. (2023). Interaction between price and expectations in the jar-guessing experimental market. Journal of Economic Interaction and Coordination, 18, 491-532.

https://doi.org/10.1007/s11403-022-00374-5

Ampofo, J. A. (2020). The nature of mortgage repayment plans in Ghana. Finance & Accounting Research Journal, 2(3), 91-104. https://doi.org/10.51594/farj.v2i3.150

Anenberg, E., Hizmo, A., Kung, E., & Molloy, R. (2019). Measuring mortgage credit availability: A frontier estimation approach. Journal of Applied Econometrics, 34(6), 865-882. https://doi.org/10.1002/jae.2720

Ayuningtyas, F. J. (2022). Permintaan rumah siap huni (Studi kasus perum perumnas DIY). Media Ekonomi, 22(1), 33-44. https://doi.org/10.30595/medek.v22i1.12524

Bank Indonesia. (2021). Survei Harga Properti Residensial Di Pasar Primer - Triwulan I 2021. In Bank Indonesia.

Bhutta, N., & Ringo, D. (2021). The effect of interest rates on home buying: Evidence from a shock to mortgage insurance premiums. Journal of Monetary Economics, 118, 195-211. https://doi.org/10.1016/j.jmoneco.2020.10.001

Bian, X., Lin, Z., & Liu, Y. (2018). House price, loan-to-value ratio and credit risk. Journal of Banking and Finance, 92, 1-12. https://doi.org/10.1016/j.jbankfin.2018.04.006

Chen, B., Yang, X., & Zhong, N. (2020). Housing demand and household saving rates in China: Evidence from a housing reform. Journal of Housing Economics, 49(March), 101693. https://doi.org/10.1016/j.jhe.2020.101693

Chen, H., Michaux, M., & Roussanov, N. (2020). Houses as ATMs: Mortgage refinancing and macroeconomic uncertainty. The Journal of Finance, 75(1), 323-375. https://doi.org/10.1111/jofi.12842

Constantinescu, M., & Lastauskas, P. (2018). The knotty interplay between credit and housing. Quarterly Review of Economics and Finance, 70, 241-266. https://doi.org/10.1016/j.qref.2018.05.013

Dajcman, S. (2022). Demand for residential mortgage loans and house prices in the Euro area. Economics and Sociology, 13(1), 40-51. https://doi.org/10.14254/2071-789X.2020/13-1/3

Deleidi, M. (2018). Post keynesian endogenous money theory: a theoretical and empirical investigation of the credit demand schedule. Journal of Post Keynesian Economics, 41(2), 185-209. https://doi.org/10.1080/01603477.2017.1338967

Delis, M. D., Hasan, I., & Tsoumas, C. (2019). The Income elasticity of mortgage loan demand. Financial Markets, Institutions and Instruments, 28(2), 115-139. https://doi.org/10.1111/fmii.12108

Ebekozien, A., Abdul-Aziz, A. R., & Jaafar, M. (2019). Remedies to inaccessibility of low-cost housing loan in Malaysia: Using the qualitative approach. Pacific Rim Property Research Journal, 25(2), 159-174. https://doi.org/10.1080/14445921.2019.1640024

Fauzia, L. ., S.A.T. Rahayu, & A.A. Nugroho. (2019). The implication of loan-to-value ratio on credit housing demand in Indonesia. In Business Innovation and Development in Emerging Economies (1st ed.). CRS Press. https://doi.org/10.1201/9780429433382-33

Gujarati, D. N., Porter, D. C., & Pal, M. (2019). Basic Econometrics (Sixth Edit). Mc Graw Hill.

Ho Phi HA, N. (2021). Factors affecting real estate prices during the covid-19 pandemic: An empirical study in Vietnam. Journal of Asian Finance, 8(10), 159-0164.

Horioka, C. Y., & Niimi, Y. (2020). Was the expansion of housing credit in Japan good or bad? Japan and the World Economy, 53(December 2019), 100996. https://doi.org/10.1016/j.japwor.2020.100996

Humbatova, S. I., & Hajiyev, N. G. O. (2021). The relationship between oil prices and real estate loans and mortgage loans in Azerbaijan. International Journal of Energy Economics and Policy, 11(1), 341-354. https://doi.org/10.32479/ijeep.10532

Karpestam, P., & Johansson, S. (2019). Interest-only-mortgages and housing market fluctuations in Denmark. Journal of Housing Economics, 46(February 2017), 101627.

https://doi.org/10.1016/j.jhe.2019.03.004

Khoirudin, R., & Kurniawan, M. L. A. (2023). A time-varying of property residential price in Indonesia: A VAR approach. Jurnal Ekonomi & Studi Pembangunan, 24(1), 69-80. https://doi.org/10.18196/jesp.v24i1.17750

Khurami, E. A., & Sarı, B. Ö. (2022). Trends in housing markets during the economic crisis and covid-19 pandemic: Turkish case. Asia-Pacific Journal of Regional Science, 6(3), 1159-1175. https://doi.org/10.1007/s41685-022-00251-w

Kurniawan, M. L. A. (2020). The stability of money demand in Indonesia: An ARDL approach. Optimum: Jurnal Ekonomi Dan Pembangunan, 10(2), 153-162. https://doi.org/10.12928/optimum.v10i2.18002

Kurniawan, M. L. A., Khasanah, U., & Baharudin, A. (2023). Determinant of property price through the monetary variables: An ARDL approach. Jurnal Ekonomi Pembangunan: Kajian Masalah Ekonomi Dan Pembangunan, 24(1), 12-23. https://doi.org/10.23917/jep.v24i1.20588

Lazuardi, I. Y., & Rahadi, R. A. (2021). Pandemic Effect towards residential properties in Bandung area. International Journal of Entrepreneurship and Management Practices, 4(15), 42-53.

Li, X., & Zhang, C. (2021). Did the Covid-19 pandemic crisis affect housing prices evenly in the U.S.? Sustainability (Switzerland), 13(21), 1-28. https://doi.org/10.3390/su132112277

Morgan, P. J., Regis, P. J., & Salike, N. (2019). LTV policy as a macroprudential tool and its effects on residential mortgage loans. Journal of Financial Intermediation, 37, 89-103. https://doi.org/10.1016/j.jfi.2018.10.001

Naoi, M., Tiwari, P., Moriizumi, Y., Yukutake, N., Hutchison, N., Koblyakova, A., & Rao, J. (2018). Household mortgage demand: A study of the UK, Australia and Japan. International Journal of Housing Markets and Analysis, 12(1), 111-130. https://doi.org/10.1108/IJHMA-03-2017-0029

Rojas, A. (2021). Mortgage credit growth for lower-income borrowers during the 2000s housing boom: Evidence and implications. Journal of Empirical Finance, 62(April), 220-233. https://doi.org/10.1016/j.jempfin.2021.04.002

Siyan, P., Adegoriola, A. E., & Erivwode, O. M. (2019). The development of mortgage finance in Nigeria and its impact on the economy. International Multilingual Journal of Science and Technology (IMJST), 4(3), 455-465.

Tang, E. (2021). Research on Interest rate risk of housing mortgage loan based on computer simulation. Computational Intelligence and Neuroscience, 2021. https://doi.org/10.1155/2021/6035022

Downloads

Published

2024-10-02

Issue

Section

Articles