Purpose The purpose of this paper is to examine the sensitivity of the Kuwait housing market to major local and regional geo-political and economic events. Design/methodology/approach This paper examines the market dynamics of the housing market in Kuwait. Kuwait provides an interesting market to consider owing to its position as a major oil producer, its sensitivity to geo-political events and its unusual demographic characteristics. Findings The error-correction model highlights that market is relatively volatile, with evidence of mean-reverting behaviour. Only when the data is smoothed are their more consistent findings with respect to underlying fundamentals. This paper also examines the response of the market to seven regional and local events. Of particular interest is that the one event that results in a consistent significant response is domestic legislation directly concerned with housing. This has a far greater impact than local or regional geo-political events. Originality/value Very few papers have considered how economic and political shocks directly impact housing markets using an event study approach. Given its geographic location and also its economic dependence on oil, Kuwait is an interesting market to consider.

Purpose This paper aims to improve the housing affordability by measuring the housing affordability in a resource-rich economy and studying the impact of implementing new policies . Design/methodology/approach This paper seeks to test the impact of new policies introduced to the Kuwaiti housing market to improve affordability. In 2008, the Kuwaiti parliament introduced two policies: a tax on empty lands and, forbidding companies to own or develop residential lands or houses. Findings By constructing the housing affordability index and the price-to-income multiplier using observations from 2004 until 2017, it has been found that affordability has worsened over time regardless of the new policies introduced in 2008. Housing in Kuwait became “severely unaffordable” (equivalent to London in the UK, San Diego in USA and Toronto in Canada). Originality/value Even with its unique condition, as a rich country, small population and availability of white land and other resources, the affordability worsened over time. Introducing new policies without solving the central issue of housing supply challenges seems not worth it. This paper is the first of its kind on the Kuwait housing market, and it provides a valuable foundation for future research on this market and similar markets in the region.