| dc.description.abstract | Owing to the government’s deliberate policy to drive infrastructure development, and the increasing trend in provision of National housing, there is no doubt that many investors are attracted to the construction sector with anticipation of high returns. However, with the ravaging effects of persistent price increases, unstable exchange rates, and high-interest rates in Uganda, some of these investors are discouraged from investing, and others may hoard out of anxiety of investing in the construction sector. The study therefore, sought out to investigate the relationship between the macroeconomic variables and the construction sector and deduce the impact of these variables on construction material prices in Uganda. The study employed a correlational research design with a quantitative approach based on only secondary data which included quarterly inflation rates, interest rates exchange rates, GDP, and money supply, obtained from the Central Bank of Uganda (BOU) reports for the period 2009 - 2018.
Correlation and regression analyses were done using StataMP version 13 software to determine the relationship and examine the effect of the selected determinant variables on construction material prices. The regressor variables comprised of inflation, interest rates, exchange rate, GDP, and money supply, while the dependent variables were price indices of cement, reinforcement steel, roofing sheets, bricks, and the combined average price index of all the above materials. The model’s validity was gauged using the R2-coefficient of determination, F-statistic, t –statistic and the p-value. Tests for linearity, normality, multicollinearity, heteroskedasticity, and autocorrelation were also conducted to ensure the accuracy of the resultant models.
The study established that all construction material prices fluctuated over the ten-year study period with generally higher prices in the recent past than before. The findings also portrayed a general increase in exchange rates, money supply, and GDP and a decrease in inflation and interest rates over the same period. Based on the correlation and regression results, there is sufficient evidence that suggests the existence of a relationship between construction material prices and macroeconomic variables. In addition, the study results showed that interest and exchange rates were the main factors affecting construction material prices with interest significantly affecting cement and exchange rate significantly affecting all materials. | en_US |
