Real estate prices and fertility in South Africa

Abstract: Using the annual times series from South Africa covering the period from 1993 to 2014, this study seeks to identify the impact of house price inflation on fertility rate. This study has two main objectives. First, this study assesses the short- and long run association between fertility rate and housing prices in South Africa. Second, this study investigates the direction of causation between fertility and housing prices. To achieve these objectives, the study utilizes the ARDL bound testing approach in analysing the short- and long-run relationship between fertility and house prices while the Granger Causality test is used to investigate the causal direction between the underlying variables. The results of this study confirm that there is a short- and long run relationship between housing prices and fertility in South Africa. A rise in housing prices by 1% reduces fertility rate by about 0.10% in the long-run. In addition, the results of the pairwise Granger causality test indicate a unidirectional causality which runs from house prices to fertility. Thus, an increase in house price inflation causes fertility decline in South Africa. Given the implications which a decline in fertility rates has on ageing population, policy measures aimed at increasing population in South Africa should consider housing market, as the decline of fertility rates is partly determined by housing prices.M.Com. (Development Economics