Employment in the ICT sector’s impact on housing prices: A study of Dublin’s Housing market 2019-2023

Sammanfattning

Housing affordability in Dublin is becoming increasingly constrained in recent years. While there is extensive previous research on what determines housing prices from a macroeconomic perspective, where price drivers such as inflation and interest rates are studied, the topic of sector related employment is seldom investigated. It has been noted that at the same time as the housing affordability in the city is decreasing, there is a rapid growth in employment in the informational and communication sector. To understand how this is related, this thesis is studying the house prices in Dublin during the years of 2019 through 2023 and their connection to employment in the informational and communication sector by employing an Auto Regressive Distributed Lag model. With this statistical model, a long run elasticity of 0.909 between employment in the studied sector and housing prices is determined over the studied time sample. We also find a short run elasticity of 0.692 however we believe that further research is needed to conclude the effect. Two control variables are employed, interest rate and inflation rate. For the interest rate, both a 3 month and a 12-month Irish bill rate are considered, however it is shown that the 3-month bill rate is not stationary in the first difference while the 12-month rate is and the 12-month rate is finally used.