The Dynamics of TourismRefugeeism on House Prices in Cyprus and Malta

Abstract

Until recently, Cyprus and Malta's economies are mainly driven by tourism. Also, the two countries are consistently referred to as the frontline states based on the age-long refugee crisis caused by African migrants during the Middle East civil unrest. On this regard, the Grouped mean approaches of the Fully-modified least square (FMOLS) and Dynamic least square (DOLS) estimators are employed to investigate the long-run relationship between the housing prices and international tourist arrivals, and the number of refugees. Using the quarterly data spanning 2005Q1 to 2016Q4, the study finds an elasticity of at most 0.37 and 0.78 of the house price with respect to the number of refugees and international tourist arrival, respectively. It further implies that the housing price and the number of refugees (refugeeism) are positively related; tourism was observed to be negatively related to the housing price. Also, there exists a significant Granger causality from the number of refugees to the house price without feedback but no evidence of Granger causality is found between tourism and the house price. The study proffers policies that effectively avert disservice and minimize challenges associated with growth in tourism activities and refugee crisis associated with the region.