Modelling Housing Market Fundamentals and the Response to Economic and Political Events: Empirical Evidence from Kuwait

Kuwait provides an interesting housing market to examine given its place as a major oil producer, its sensitivity to geo-political events and its unusual demographic characteristics. This paper firstly models the dynamics of the Kuwaiti housing market, using an errorcorrection framework. The findings highlight that the market is relatively volatile, with evidence of mean-reverting behaviour. The paper also examines the response of the market to seven regional and local events. Of particular interest is that the one event that results in a consistent significant response is domestic legislation directly concerned with housing. This has a far greater impact than local or regional geo-political events