This study contributes to the literature by incorporating real housing wealth as a new determinant of the household consumption expenditure function in Pakistan. In Pakistan, the rising housing wealth is generated by fast-paced housing investments, which are expected to produce significant wealth effects as compared to financial wealth. Aiming to explore the dynamics of housing wealth effects in Pakistan, we use ARDL and NARDL Bound testing econometric approaches for assessing cointegration among variables using annual data from 1972 to 2024. The empirical findings reveal significant positive housing wealth effects in both the short-run and long-run, with no statistical evidence of long-run asymmetries in housing wealth effects in the case of Pakistan. Relative to disposable income and financial wealth, the greater magnitude of housing wealth effects seeks the attention of policymakers in crafting focused and fruitful strategies for keeping households’ spending behaviour on the right track during the phases of economic activity.
