THE INFLUENCES OF
STOCK MARKET WEALTH ON CONSUMER SPENDING ON PROPERTY
By
ABSTRACT
Common sense tells us that variation of share price in stock market should be related to consumer spending on property. In other words, most of the people might think that when there is an increase in share value, this will lead to the increase in consumer spending on property as well. However, how true will this concept be? Therefore, this paper investigates the relationship between stock market wealth and consumer spending on property. Besides, it also examine the potential differences between the property expenditure that generated by stockholders and non stockholders. In addition, by measuring the respond of consumers to the changes of others wealth effects besides stock market effect, we are able to analyze the consumer spending pattern on property due to the effects like housing prices, personal wealth and interest of loan. In this research, we rely on the simple linear regression model to identify the relationship between stock price movements and property expenditure. On the other hand, paired sample t-test will be employed to find out whether the spending of stockholders different from the spending of non stockholders on property. In addition, descriptive statistic will be used in analyzing the consumer spending pattern on property due to the others factors besides stock price effect. As a result, this paper find the stock market wealth generate a positive impact on consumer spending on property but not significant. Thus, our findings provide the evidence that there is no such thing that the stock market fluctuation is important to influence the consumer spending on property. This is because we noticed that household decision regarding the home ownership can be affected by different wealth effects besides the changes in share value.
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December 2003
Number 3