The Impact of Exchange Rate Uncertainty and Covid-19 Pandemic on House Prices in Tehran

Abstract

The purpose of the study is to portray the effect of exchange rates, its uncertainty and covid-19 pandemic on house prices in Tehran using the monthly data from Mar, 2016 to Mar, 2021. In order to calculate the uncertainty, IGARCH model and to estimate the mean equation, the ARDL method have been used. According to research results, the effect of exchange rate and exchange rate uncertainty index on housing prices as the objectives of this study, are positive and significant. Accordingly, a 100% increase in the exchange rate and the exchange rate uncertainty index will cause a 14% and 6% increase in housing prices in Tehran, respectively. Therefore, any action that reduces uncertainty in the future situation of the foreign exchange market can be effective in reducing the negative effects on housing supply and demand. Also, the results of model estimation show that the outbreak of Corona virus has acted as a shock and increased housing prices in Tehran.

Keywords

• exchange rate uncertainty
• covid-19 pandemic
• house prices
• tehran city