The Correlation between Exchange Rates and Selected Types of Building Materials Prices in Namibia, 2016-2021

Abstract

Namibia is faced with low access levels to housing, a situation partly ascribed to costly building materials. As an open small economy which imports a significant share of its building materials requirements, the exchange rate remains key factor on the trend of end user prices. This paper analyzed bivariate relationships between the exchange rate and building material prices disaggregated in six categories of building materials namely: Brickwork materials; Roofing, doors & window materials; Plumbing materials; Electrical materials; Tilling & painting materials; and Total materials. The correlation coefficient results ranged from 0.4751 to 0.8990 with Tilling & Painting and brickwork materials having the lowest of all albeit generally still high correlation coefficient of 0.5 while Electrical and Plumbing materials have the highest correlation coefficients of 0.8990 and 0.7819 respectively. This paper interprets these results in line with composition of imports among these categories. Brickwork materials that have the lowest correlation coefficient alongside tilling and painting materials are predominantly produced locally while Electrical and plumbing materials with the highest correlation coefficients are predominantly imported