Empirical analysis of space and capital markets in South Africa: A review of the REEFM- and FDW models

Abstract

This paper assesses the different models, in conjunction with the different theories surrounding the distinction and interdependencies between space- and capital markets. First, the theory of space- and capital markets is discussed with reference to two models, the FDW and the REEFM models. The FDW model provides a diagrammatic explanation of the behaviour of the property market, while the REEFM is an econometric model based on statistical principles that are able to forecast property-market behaviour by interpreting specific given variables. The REEFM model as the perceived more sophisticated model, un-tested in South Africa, was then analysed to test its applicability in the South African context. The findings confirmed the applicability of the model, although one part is not confirmed and is suggested for further research.