DID PENSION FUND WITHDRAWALS CREATE A HOUSING BUBBLE IN KAZAKHSTAN?

Abstract

This paper investigates how pension fund withdrawal acceptance from 1st January of 2021 for enhancement of living conditions of citizens in Kazakhstan influenced housing pricing in primary and secondary markets. We used panel data for 16 different cities in order to capture the influence on the regional level as well as on the national. We applied Fixed Effects Linear Model (FELM) to estimate the effects of pension fund withdrawals (PFW) on housing prices. Also, it was aimed to detect the existence of bubbles on the housing market of Kazakhstan during the period from January 2014 till September 2021. For this purpose, we applied the Generalized Supremum Augmented Dickey-Fuller Test (GSADF), developed by Philips et al (2015) and widely used in recent academic literature for the identification of bubbles for different asset types. Our results show that there is a housing bubble in the secondary and primary housing markets of Kazakhstan. Moreover, the PFW policy increased the housing prices in major cities and influenced the creation of the housing bubble in Nur-Sultan and Almaty.