Study the Effect of Exchange Rate Volatility on House Price in Iran (Exponential GARCH and Quantile Regression Approach)

Housing is one of the fundamental human needs. Accordingly to Maslov’s hierarchy of needs, housing as a physiological and basic need, set the stage for other needs for safety and survival, social relation, self-esteem and self-actualizution. Fulfilling a wide range of needs with housing, means that housing market can influence the behavior of individuals as well as the entire society. Given that, the housing market is linked to the entire economy of a country, it is therefore considered a very important market. On the other hand, various studies show that the exchange rate is a key variable that failure to pay attention to proper management can create problems for the economy of any country in various dimensions. So that Iran’s economy is no exception. Accordingly, the objective of this research is studing the effect of exchange rate volatility on house price in Iran from first quarter of 2006 to fourth quarter of 2019. The method of collecting research data is the library research method and to study the research topic, first the exchange rate volatility is estimated using the exponential GARCH Model and then the effect of exchange rate volatility on house price is investigated using the quantile regression method. The result indicate that, exchange rate volatility has a significant negative impact on house price and interaction effect of exchange rate volatility and inflation on house price is significant positive.