The long-run impact of remittances on house prices in Kenya

Abstract

Purpose Given the coincidental and sustained rise in house prices and foreign capital flows in Kenya, this study aims to understand whether a long-run relationship exists between real diaspora remittances and real house prices. Design/methodology/approach This study uses data from 2004-Q1 to 2020-Q4 and applies an autoregressive distributed lag model for estimation. Findings The results indicate that a positive and significant relationship exists between real remittances and real house prices in Kenya in the long run. Originality/value To the best of the authors’ knowledge, there is no study exploring the relationship between real remittance inflows and house prices in Kenya, after controlling for other key macroeconomic determinants of house prices. This study addresses this research gap.