The impact of property price on construction output

The interaction between the construction market and the overall economy has attracted much attention, but few studies have investigated the influence of the property market on the construction market in terms of property price. The disaggregated data of Hong Kong's housing and retail construction sectors are collected to investigate the impact of property price on construction output. The newly developed autoregressive distributed lag (ARDL) bounds testing approach and the error correction (EC)-based Granger causality test are employed. The bounds testing results suggest that there exist stable long-run relationships between construction output and property price for both housing and retail construction sectors. Specifically, a 1.00% increase in the housing price and retail price lead to a 0.55% and 0.42% increase in construction outputs for the two sectors respectively. In addition, the Granger causality tests confirm a distinct long-run causal flow from property price to construction output. Furthermore, the proposed ARDL approach provides an effective method for forecasting construction output.