The focus of this research is to find out the dynamic impact of the housing market with macroeconomic variables. Using seven macroeconomics variables (inflation, FDI, GDP, exchange rate, money supply, interest rate and stock market) the study period of this research is from 1994-2008.
First finding in our study using the impulse response analysis is that the shocks in housing price does not produces any significant effect in any macroeconomics variables in this research. The shocks in housing price will only creates a minor negative effect on inflation, gross domestic product, money supply and interest rate in the short run. Meanwhile, it creates a positive effect on exchange rate, stock market and foreign direct investment in the short run. The VDC suggest that among all the macroeconomic variables selected, only SBI and GDP which have enough contribution to the variation of HPI.
Meanwhile in the short run the HPI will reacts negatively on the INF shocks, and the HPI contributes around 4-6% of the INF shocks. In the short run the HPI will reacts negatively on the EXC shocks but and the HPI contributes around 6-10% of the EXC rate shocks. In the short run the HPI will reacts negatively on the GDP shocks, and reacts positively in the medium run and the HPI contributes around 0.2-3.9% of the GDP shocks. In the short run the HPI will reacts positively on the FDI shocks, and the HPI contributes around 2.6-6.4% of the FDI shocks. In the short run the HPI will reacts positively on the MS shocks but in the medium run the reactions will fluctuate and the HPI contributes around 1.5-4.1% of the MS shocks. In the short run the HPI will reacts negatively on the SBI shocks, and reacts positively in the medium run and the HPI contributes around 7.7-10.6% of the EXC rate shocks. In the short run until medium run the HPI will reacts positively on the IHSG shocks, and the HPI contributes around 46-50% of the IHSG shocks.

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