scholarly journals Are Housing Prices Sustainable in 35 Large and Medium-Sized Chinese Cities? A Study Based on the Cheap Talk Game and Dynamic GMM

2021 ◽  
Vol 13 (22) ◽  
pp. 12791
Author(s):  
Jie Wang ◽  
Biyu Peng ◽  
Xiaohua Xia ◽  
Zhu Ma
Keyword(s):  
House Prices ◽  
Housing Prices ◽  
Housing Price ◽  
Cheap Talk ◽  
Purchase Decisions ◽  
Individual Housing ◽  
Economic Fundamentals ◽  
Definite Effect ◽  
True State ◽  
The Cost

Focusing on the rapid rise of China’s housing prices in recent years, in this paper, we construct a model using the cheap talk game that centers on how information receivers in a market make inferences about the true state of the information based on the cost-free signals they receive and then make decisions based on these inferences, which in turn affect market equilibrium. By constructing a cheap talk game model of house prices, we examine the correlation between market expectations, economic fundamentals, and individual housing purchase decisions. Then, we conduct an empirical analysis using the dynamic GMM method based on the panel data of 35 large and medium-sized cities in China. The analysis reveals that: (1) when the whole of society expects housing prices to rise, housing prices will rise regardless of the true state of economic fundamentals; (2) when information on economic fundamentals is accurate and reliable, home buyers tend to make purchase decisions based on such information, thus maximizing the utility of society as a whole; but when information on economic fundamentals is unreliable, home buyers tend to make purchase decisions according to their own housing price expectations, which is not conducive to the optimization of the utility of society as a whole; (3) the empirical results also reveal that expectations are a non-negligible factor in the rise of housing prices, and the coefficient of expectations exceeds that of each economic fundamental; this demonstrates the investment-driven attribute of the housing market in China. At the same time, economic fundamentals have a definite effect on housing prices, which implies that the rise of housing prices in China is supported by objective conditions.

scholarly journals Are There Any Housing Bubbles in Turkey?

2021 ◽  
Author(s):  
Özge Korkmaz ◽  
Ebru Çağlayan Akay ◽  
Hoşeng Bülbül
Keyword(s):  
Housing Market ◽  
House Prices ◽  
Housing Prices ◽  
Housing Price ◽  
Economic Fundamentals ◽  
The Past ◽  
Price Increases ◽  
Long Time ◽  
Housing Bubbles ◽  
Turkish Lira

It is very important that the housing market, which meets the most basic need of people is needed for shelter from the past to the present, has a stable structure. The instability structure of the housing market is generally associated with the presence of housing bubbles. The deviation of housing prices from their basic value and not being able to be explained by economic fundamentals leads to the formation of housing bubbles. Housing bubbles can lead to permanent losses, as it may take a long time to return to normal prices. For Turkey as a developing country, it is important to identify an unstable structure in house prices discuss the basic economic factors related to this. After the global increases in housing prices, inflation, and depreciation in the Turkish lira, Turkey has become the country with the highest housing price increases globally in 2020. In the study, the presence of bubbles in the housing market for Ankara, Izmir, Istanbul, and Turkey in general, was investigated by SADF and GSADF unit root tests for the period 2010:01-2021:02. In this context, the study examines the presence of bubbles in housing prices for Ankara, Izmir, Istanbul, and Turkey in general, which are the three cities with the highest price increases. As a result of the study, the presence of bubbles in the housing market has been determined for Ankara, Istanbul, Izmir, and Turkey in general.

Dynamic effects and spatial heterogeneity of land supply on housing price: evidence from Nanchang, China

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Zhijiang Wu ◽  
Yongxiang Wang ◽  
Wei Liu
Keyword(s):  
Spatial Heterogeneity ◽  
House Prices ◽  
Housing Prices ◽  
Housing Price ◽  
Dynamic Effects ◽  
Negative Effects ◽  
Land Supply ◽  
Content Type ◽  
Major Factors ◽  
The City

Purpose Economic fundamentals are recognized as determining factors for housing on the city level, but the relationship between housing price and land supply has been disputed. This study aims to examine what kind of impact housing prices have on land supply and whether there is heterogeneity in different regional spaces. Design/methodology/approach This study collects the relevant data of land supply and housing prices in Nanchang from 2010 to 2018, constructs a vector autoregression (VAR) model, including one external factor and four internal factors of land supply to explore the dynamic effects and spatial heterogeneity of land supply on housing prices through regression analysis. Also, the authors use the geographic detector to analyze the spatial heterogeneity of housing prices in Nanchang. Findings This study found that the interaction between land supply and housing price is extremely complex because of the significant differences in the study area; the variables of land supply have both positive and negative effects on housing price, and the actual effect varies with the region; and residential land and GDP are the two major factors leading to the spatial heterogeneity in housing price. Research limitations/implications The dynamic effects of land supply on housing price are mainly reflected in the center and edge of the city, the new development area, and the old town, which is consistent with the spatial pattern of the double core, three circles and five groups in Nanchang. Originality/value This is a novel work to analyze the dynamic effects of land supply on house prices, instead of a single amount of land supply or land prices. Furthermore, the authors also explore the spatial heterogeneity according to the regional characteristics, which is conducive to targeted policymaking.

scholarly journals Capital Gain Expectations And Efficiency In The Real Estate Markets

2011 ◽  
Vol 6 (4) ◽  
Author(s):  
Shady Kholdy ◽  
Ahmad Sohrabian
Keyword(s):  
Real Estate ◽  
Housing Market ◽  
Housing Prices ◽  
Housing Price ◽  
Capital Gain ◽  
Real Estate Markets ◽  
The Real ◽  
The Real Estate ◽  
Real Estate Price ◽  
Economic Fundamentals

Capital gain expectation is known to be an important determinant of housing price hikes during the real estate booms. Empirically, however, specifying the way expectations about current and future economic variables are formed is a dilemma. Although it is reasonable to assume that economic fundamentals have a significant effect on the investors’ expectation about future gains, a number of housing market analysts claim that expectations of housing prices are extrapolative. This study attempts to investigate the mechanism by which investors’ capital gain expectations and psychology are shaped. The results suggest that housing prices are predictable with respect to capital gain expectations only when these expectations are formed by extrapolation of past price appreciations. Considering the large number of empirical evidence on housing market anomaly with respect to capital gain expectations, the results suggest that the extrapolative expectations can better explain the real estate price behavior than expectations that are formed by economic fundamentals.

scholarly journals House Prices and Macroprudential Policies

2020 ◽  
Vol 20 (291) ◽  
Author(s):  
Bhupal Singh
Keyword(s):  
Strong Influence ◽  
House Prices ◽  
Housing Prices ◽  
House Price ◽  
Housing Price ◽  
Macroprudential Policies ◽  
Regulatory Changes ◽  
Downward Pressure ◽  
Level Data ◽  
Housing Assets

This paper examines the efficacy of macroprudential policies in addressing housing prices in a developing country while underscoring the importance of fundamental factors. The estimated models using city-level data for India suggest a strong influence of fundamental factors in driving housing prices. There is compelling evidence of the effectiveness of macroprudential tools viz., Loan-to-value (LTV) ratio, risk weights, and provisioning requirements, in influencing housing price movements. A granular analysis suggests an even stronger impact on housing prices of a change in the regulatory LTV ratio for large-sized vis-à-vis small-sized mortgages, which buttresses their potency in fighting house price speculations. A tightening of the risk weights on the housing assets of banks causes significant downward pressure on house prices. Similarly, regulatory changes in standard asset provisioning on housing loans also influence house prices.

scholarly journals The House Price Dynamics and the Macro-Economy: an Empirical Perspective of UAE

2019 ◽  
Vol 2 (1) ◽  
pp. 28-33
Author(s):  
Yahya Hamad Al Zaabi ◽  
Genanew Bekele
Keyword(s):  
House Prices ◽  
Housing Prices ◽  
House Price ◽  
Housing Price ◽  
Future Research ◽  
Hedonic Price ◽  
Policy Makers ◽  
Empirical Perspective ◽  
House Condition ◽  
Internal And External Factors

Objective: The paper aims to examine house price drivers in Dubai, addressing the effect of internal and external factors afecting house prices   Design/methedology/approach: Using the Hedonic price model, the study examined the implications of house size (space), the availability of bathrooms, bedrooms, waterfronts, and pool and cell phone towers within residential area as auxiliary determinant factors to housing price within developed cities by using the Hedonic Modelling. Also, study highlight the effect of the green strategies that been followed by developer on the housing prices.   Findings: The study is expected to reveal results with significant ramifications for researchers, practitioners and policy makers. From a policy perspective, there is an obvious interest in understanding whether the price of housing is affected by different attributes differently along its distribution.   Research limitations/implications: The data used in this study could be limited, and depends on information to be provided by the Dubai Land Department. There is a room for future research to include more data (such as on other house attributes such as house condition, plot numbers and configuration).

scholarly journals The influence of a mortgage interest and capital deduction policy on house prices

2020 ◽  
Vol 38 (6) ◽  
pp. 563-577
Author(s):  
Wouter Vangeel ◽  
Laurens Defau ◽  
Lieven De Moor
Keyword(s):  
Interest Rates ◽  
Fixed Effects ◽  
Design Methodology ◽  
House Prices ◽  
Housing Prices ◽  
Housing Price ◽  
Content Type ◽  
Mortgage Interest ◽  
Price Determinants ◽  
Fixed Effects Regression

PurposeSince 2005, Belgian housing prices have strongly increased. As the timing coincides with the implementation of a new fiscal package in order to stimulate homeownership, our study attempts to provide an understanding whether the mortgage interest and capital deduction (MICPD) policy has had the side-effect of increasing housing prices while, at the same time, controlling for key housing price determinants.Design/methodology/approachA fixed-effects regression model is used on a panel dataset of the three Belgian regions over the period 1995–2015.FindingsEstimations are carried out separately for different house types, being useful as our empirical analysis ascertains a significant price-increasing effect for ordinary houses and apartments but a significant price-reducing effect for villas. In addition, we find, among other things, that interest rates' influence has been less substantial than commonly thought.Originality/valueThese results are relevant for all governments willing to stimulate homeownership through fiscal stimuli.

scholarly journals Energy Performance Certificates and Its Capitalization in Housing Values in Sweden

2019 ◽  
Vol 11 (21) ◽  
pp. 6101 ◽  
Author(s):  
Mats Wilhelmsson
Keyword(s):  
Propensity Score ◽  
House Prices ◽  
Housing Prices ◽  
Housing Price ◽  
Energy Performance ◽  
Control Group ◽  
Propensity Score Method ◽  
Propensity Score Methods ◽  
Price Distribution ◽  
The Impact

The impact on energy performance certificates on housing prices has been investigated extensively in recent years. However, the results of these investigations are mixed. We add to the literature by more specifically controlling for potential biases, by employing a combination of alternative approaches to estimate the causal relationship between house prices and energy performance certificates. We use a traditional hedonic modeling approach, but we additionally employ propensity score methods to be able to compare treated houses with a control group. We also investigate the impact of the outliers, spatial dependency, and parameter heterogeneity of our estimates. Moreover, we use the quantile regression technique to test the hypothesis that the capitalization effect varies across the price distribution. Our results, analyzing more than 100,000 observations, indicate there is an upward bias if one is not controlling for outlier and selection bias. Regardless of the propensity score method approach, the results are lower than a model (around 3 percent capitalization, compared to 6 percent). However, our results do not support that the impact of energy performance certificates varies in the price distribution. Consequently, the certificates are not differently capitalized in the high-end housing price segment. Finally, our results support the hypothesis that the energy performance certificate should be more capitalized into house prices in the northern and colder parts of Sweden than in the southern regions.

scholarly journals International Real Estate Review

2015 ◽  
Vol 18 (3) ◽  
pp. 365-382
Author(s):  
Yu Zhou ◽  
◽  
Hongru Guo ◽  
Keyword(s):  
Hong Kong ◽  
Real Estate ◽  
Housing Prices ◽  
Housing Price ◽  
Monthly Data ◽  
Economic Fundamentals ◽  
Cross Border ◽  
Price Bubble

In this paper, monthly data from May 2004 to December 2011 are used to calculate the equilibrium housing price predicted by the economic fundamentals of Shenzhen and additional economic fundamentals of Hong Kong under the background of the Shenzhen Hong Kong cross-border integration. Equilibrium housing price is then compared against the actual housing price to test the degree of the Shenzhen housing price bubble during the studied period. We find that aided by the economic fundamentals of Hong Kong, the Shenzhen housing price can be better explained and the gap between the actual and equilibrium housing prices can be largely reduced, thus implying a much smaller Shenzhen housing price bubble.

International Real Estate Review

2015 ◽  
Vol 18 (2) ◽  
pp. 217-240
Author(s):  
Weida Kuang ◽  
◽  
Peng Liu ◽  
Keyword(s):  
Economic Growth ◽  
Interest Rates ◽  
House Prices ◽  
Supply And Demand ◽  
Housing Prices ◽  
Consumer Price Index ◽  
Housing Price ◽  
Price Increases ◽  
Relationship Of ◽  
The Impact

In recent years, housing prices and inflation have been growing constantly in China. Higher house prices and higher inflation affect both household consumption and economic growth. We have developed a four-sector general equilibrium model of consumers, developers, firms, and the central bank to illustrate the relationship of house prices with inflation. The theoretical model demonstrates that house prices and inflation are positively correlated and endogenously determined. By using panel databases of 35 major cities in China during the period of 1996-2010, we find that the association between house prices and inflation is asymmetric. The impact of inflation on housing prices is greater than that of housing prices on inflation, which implies that housing prices effectively hedge inflation. Secondly, household income positively affects housing prices, but interest rates negatively influence housing prices. Accordingly, to curb soaring housing prices, policymakers not only should balance supply and demand, but also control for inflation. Thirdly, economic growth has less of an impact on inflation than housing prices. Hence, abnormal housing price increases are more likely to exacerbate inflation than economic growth. In addition, housing prices have a greater impact on inflation than rental prices, albeit the latter is a component of the consumer price index (CPI). Finally, money supply has much greater effects on inflation than housing prices and economic growth.

Do House Prices Affect Fertility Behavior in China? An Empirical Examination

2020 ◽  
Vol 43 (5) ◽  
pp. 423-449
Author(s):  
William A. V. Clark ◽  
Daichun Yi ◽  
Xin Zhang
Keyword(s):  
House Prices ◽  
Housing Prices ◽  
Negative Relationship ◽  
Household Finance ◽  
Empirical Examination ◽  
Market Prices ◽  
Large Cities ◽  
Negative Effect ◽  
The Cost ◽  
Original Interpretation

The article provides findings for China that are consistent with the studies that document a negative relationship between the cost of housing and fertility. Although some studies have questioned the negative relationship between housing market prices and fertility, overall the evidence from this large sample study in China suggests that the original interpretation of a negative relationship is still viable. The research uses data from the China Household Finance Survey between 2013 and 2017 to show that there is an approximately 0.94-percentage-point decrease in the probability of having a child under two with a 1 percent increase in housing prices. The article provides instrumental models to account for endogeneity. The results are robust across city levels and by wife’s age. The negative effect is significant in the thirty-five large cities in China but not significant for other smaller cities.

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