Housing construction in Bulgaria: an econometric analysis using stepwise regression (2015-2025)
DOI:
https://doi.org/10.31558/2307-2318.2026.1.4Keywords:
Housing construction, GDP per capita, Stepwise OLS, Durbin-Watson, VIF, Labour forceAbstract
The article analyses the determinants of housing construction in Bulgaria through econometric estimation of a model with the Stepwise OLS method on 40 quarterly observations for the period 2015Q4–2025Q3. The dependent variable is the number of newly completed housing units by number of rooms. For the studied period, housing construction activity in Bulgaria increased 3.25 times with a variation of 39.5%. The initial set of potential predictors includes GDP per capita, working-age population, capital market index, housing loans, central bank interest rate, commercial banks’ interest rate on mortgage loans in national currency and household interest expenses on mortgage loans, employment rate. The algorithm identifies three significant predictors: GDP per capita, the Sofix stock exchange index and the labour force. The final model achieves a coefficient of determination of 0.891 and F(3,36) = 98.155 (p < 0.001), with Durbin-Watson = 2.032 confirming the lack of autocorrelation in the residuals. The results show that GDP per capita growth over the studied ten-year period is a leading factor in the increase in construction activity (with a change of 2.73 times over the 40-quarter period), while the stock market index (being an alternative for household investment with a growth of 2.33 times) and the decreasing size of the labour force due to demographic reasons and migration (reduction to 0.92 compared to 2015Q4) have a negative effect.
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