scholarly journals International Real Estate Review

2018 ◽  
Vol 21 (3) ◽  
pp. 397-418
Author(s):  
Chin-Oh Chang ◽  
◽  
Shu-Mei Chen ◽  
Keyword(s):  
Housing Market ◽  
Home Ownership ◽  
Housing Prices ◽  
Housing Price ◽  
Poor Quality ◽  
Housing Demand ◽  
Vacancy Rate ◽  
Income Ratio ◽  
Holding Cost ◽  
Housing Vacancy

This paper discusses the contradicting phenomenon of housing demand in Taiwan. First, an introduction is given on the three primary characteristics of the housing market in Taiwan, which are a high housing vacancy rate, high housing prices and high home ownership. Secondly, we explore the motivation and preferences behind housing purchase. Since the housing price-income ratio continues to increase, unaffordable housing prices cause households to suffer from poor quality of life. The issues of housing justice are highlighted. Recently, the demographics and social values have rapidly changed. Therefore, even if homebuyers face unaffordable housing prices, they still prefer to buy housing instead of renting due to the traditional cultural belief that ¡§to have land is to have wealth¡¨. This has resulted in the phenomenon with high home ownership rate yet high housing prices. On the other hand, the low holding cost of housing and imbalance in urban and rural development perpetuate the high housing vacancy rate in the housing market. This results in an unhealthy housing market and misallocation of resources. Finally, recommendations for related government policy making are made based on the findings.

Property investor decisions using income and rental ratio signals

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Billie Ann Brotman
Keyword(s):  
Real Estate ◽  
Housing Market ◽  
Discount Rate ◽  
Price Index ◽  
Housing Prices ◽  
Housing Price ◽  
Consumer Sentiment ◽  
Content Type ◽  
Income Ratio ◽  
Real Estate Prices

PurposeThis paper, a case study, aims to consider whether the income ratio and rental ratio tracks the formation of residential housing price spikes and their collapse. The ratios are measuring the risk associated with house price stability. They may signal whether a real estate investor should consider purchasing real property, continue holding it or consider selling it. The Federal Reserve Bank of Dallas (Dallas Fed) calculates and publishes income ratios for Organization for Economic Cooperation and Development countries to measure “irrational exuberance,” which is a measure of housing price risk for a given country's housing market. The USA is a member of the organization. The income ratio idea is being repurposed to act as a buy/sell signal for real estate investors.Design/methodology/approachThe income ratio calculated by the Dallas Fed and this case study's ratio were date-stamped and graphed to determine whether the 2006–2008 housing “bubble and burst” could be visually detected. An ordinary least squares regression with the data transformed into logs and a regression with structural data breaks for the years 1990 through 2019 were modeled using the independent variables income ratio, rent ratio and the University of Michigan Consumer Sentiment Index. The descriptive statistics show a gradual increase in the ratios prior to exposure to an unexpected, exogenous financial shock, which took several months to grow and collapse. The regression analysis with breaks indicates that the income ratio can predict changes in housing prices using a lead of 2 months.FindingsThe gradual increases in the ratios with predetermine limits set by the real estate investor may trigger a sell decision when a specified rate is reached for the ratios even when housing prices are still rising. The independent variables were significant, but the rent ratio had the correct sign only with the regression with time breaks model was used. The housing spike using the Dallas Fed's income ratio and this study's income ratio indicated that the housing boom and collapse occurred rapidly. The boom does not appear to be a continuous housing price increase followed by a sudden price drop when ratio analysis is used. The income ratio is significant through time, but the rental ratio and Consumer Sentiment Index are insignificant for multiple-time breaks.Research limitations/implicationsInvestors should consider the relative prices of residential housing in a neighborhood when purchasing a property coupled with income and rental ratio trends that are taking place in the local market. High relative income ratios may signal that when an unexpected adverse event occurs the housing market may enter a state of crisis. The relative housing prices to income ratio indicates there is rising housing price stability risk. Aggregate data for the country are used, whereas real estate prices are also significantly impacted by local conditions.Practical implicationsRatio trends might enable real estate investors and homeowners to determine when to sell real estate investments prior to a price collapse and preserve wealth, which would otherwise result in the loss of equity. Higher exuberance ratios should result in an increase in the discount rate, which results in lower valuations as measured by the formula net operating income dividend by the discount rate. It can also signal when to start reinvesting in real estate, because real estate prices are rising, and the ratios are relative low compared to income.Social implicationsThe graphical descriptive depictions seem to suggest that government intervention into the housing market while a spike is forming may not be possible due to the speed with which a spike forms and collapses. Expected income declines would cause the income ratios to change and signal that housing prices will start declining. Both the income and rental ratios in the US housing market have continued to increase since 2008.Originality/valueA consumer sentiment variable was added to the analysis. Prior researchers have suggested adding a consumer sentiment explanatory variable to the model. The results generated for this variable were counterintuitive. The Federal Housing Finance Agency (FHFA) price index results signaled a change during a different year than when the S&P/Case–Shiller Home Price Index is used. Many prior studies used the FHFA price index. They emphasized regulatory issues associated with changing exuberance ratio levels. This case study applies these ideas to measure relative increases in risk, which should impact the discount rate used to estimate the intrinsic value of a residential property.

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.

scholarly journals Housing Prices in Unregulated Markets: Study on Verticalised Dwellings in Santiago de Chile

Buildings ◽  
2019 ◽  
Vol 10 (1) ◽  
pp. 6 ◽  
Author(s):  
José Francisco Vergara-Perucich ◽  
Carlos Aguirre-Nuñez
Keyword(s):  
Housing Market ◽  
Affordable Housing ◽  
Housing Prices ◽  
House Price ◽  
Housing Price ◽  
Housing Affordability ◽  
Price Formation ◽  
Land Values ◽  
Santiago De Chile ◽  
Data Transparency

Chile faces a housing affordability crisis, given that most of the population is unable to secure a house. While housing prices between 2008 and 2019 increased by 63.96%, wages only increased by 21.85%. This article presented an analysis of the housing price configuration for the main borough in the country—Santiago. The assessment focused on verticalised housing constructed between 2015 and 2019. The article developed an exploratory study on the price of housing in Santiago to generate a diagnosis to identify the role played by expectations of profitability when configuring price. Based on the information generated, we sought to contribute to the discussion on public policies that advance the development of affordable housing in central boroughs with high urban value, as is the case for Santiago’s borough of Greater Santiago. We hypothesised that profit expectation of real estate developers plays a key role in the housing prices, and an adjustment in the profit ratios might increase the affordability while keeping the housing market above profitable rates. This research addressed the lack of data transparency in the Chilean housing market with archival research, reconstructing costs and earnings from projects based on official registrations of transactions at the borough level. In Chile, the access to investment costs, land values, yields, and house price formation are not publicly available, even though these factors imply that many households are facing severe difficulties in paying for and accessing decent housing.

scholarly journals Urban Structure, Subway Systemand Housing Price: Evidence from Beijing and Hangzhou, China

2019 ◽  
Vol 11 (3) ◽  
pp. 669 ◽  
Author(s):  
Xiaoqi Zhang ◽  
Yanqiao Zheng ◽  
Lei Sun ◽  
Qiwen Dai
Keyword(s):  
Housing Market ◽  
Housing Prices ◽  
Housing Price ◽  
Structural Features ◽  
Urban Structure ◽  
Constrained Clustering ◽  
The Core ◽  
Urban Core ◽  
Subway System ◽  
The Relationship

Using housing market data of Beijing and Hangzhou, China, we conduct a case study to detect how the difference of urban structure can affect the relationship between the subway system and housing prices. To quantify the characteristics of urban structure, we propose a constrained clustering method, which can not only reveal the spatial heterogeneity of the housing market, but also provides a link between heterogeneity and the underlying urban structure. Applying constrained clustering to Beijing and Hangzhou, we find that the relationship between accessibility to metro stations and housing prices is weak and vulnerable, while the improvement of commuting efficiency, measured by a key variable, the metro index, does have a robust connection to metro premium on housing units. In particular, only a large metro index can be associated with a positive metro premium. Structural features, such as the size of urban core and the existence of multiple sub-centers, influence the metro premium by affecting the value and spatial distribution of the metro index. The evidence from Beijing and Hangzhou supports that in a mono-centric city, the size of the urban core is positively associated with the metro index and the metro premium, while in a poly-centric city with a small urban core, the metro index tends to be lower in the core region and higher in the satellite regions, which enforces the metro premium to be negative in the core while positive outside of the core.

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 HUBUNGAN INDEKS HARGA PROPERTI RESIDENSIAL DAN KREDIT PERBANKAN

2019 ◽  
Vol 3 (1) ◽  
pp. 95-111
Author(s):  
Njo Anastasia ◽  
Fabian Hidayat
Keyword(s):  
Gross Domestic Product ◽  
Housing Market ◽  
Housing Prices ◽  
Housing Price ◽  
Domestic Product ◽  
Test Model ◽  
Mortgage Interest ◽  
House Type ◽  
Banking Credit ◽  
The Relationship

Demand and supply in housing market depends on macroeconomic conditions such as Gross Domestic Product, interest rates, and housing prices. Changes to these variables are related to changes in housing market. This study aims to examine the relationship of housing prices, Gross Domestic Product, mortgage interest rate to Banking Credit. Knowing the relationship will be useful in making strategic decisions related to property investment and portfolio management. Housing price using Residential Price Index in primary market will be grouped into three parts based on land area of residential property consist of small house type, medium house type, and big house type. Data processing using Auto Regressive Distribution Lag (ARDL) bound test model to test the relationship between variables. The result of the research shows that there is a significant long run cointegration on the variable of housing price, Gross Domestic Product, and mortgage interest to banking credit. Furthermore, in testing each housing price group, the test results also show the relationship between these variables.

scholarly journals A Novel Housing Price Misalignment Indicator for Germany

2019 ◽  
Vol 20 (4) ◽  
pp. e759-e794 ◽  
Author(s):  
Markus Hertrich
Keyword(s):  
Housing Market ◽  
Housing Prices ◽  
Housing Price ◽  
Interest Rate Risk ◽  
Residential Property ◽  
Advanced Stage ◽  
Consumer Prices ◽  
Main Factors ◽  
Fundamental Value ◽  
German Housing Market

Abstract From 2014 until present, housing prices in Germany have been rising faster than consumer prices in all quarters except one, raising concerns about an excessive overheating of the housing market. To assess the vulnerability of the German housing market to a future realignment of prices or even a housing bust, this paper develops a housing price misalignment indicator that is composed of seven indicators, which are commonly associated with the fundamental value of residential property. An empirical application to the most recent data suggests that the German housing market exhibits an overvaluation of approximately 11%, where interest rate risk and a relatively advanced stage of the housing cycle are identified as the main factors fueling these imbalances, while a rather solid debt-servicing capacity mitigates these imbalances since end-2009.

Long-run drivers and integration in interprovincial Canadian housing price relations

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Vijay Kumar Vishwakarma
Keyword(s):  
Housing Market ◽  
Granger Causality ◽  
Global Financial Crisis ◽  
Housing Prices ◽  
Housing Price ◽  
Housing Markets ◽  
Content Type ◽  
Stochastic Trend ◽  
Long Run ◽  
Long Run Equilibrium

Purpose This paper aims to examine the integration of housing markets in Canada by examining housing price data (1999–2016) of six metropolitan areas in different provinces, namely, Calgary, Vancouver, Winnipeg, Toronto, Montreal and Halifax. The authors test for cointegration, driver cities of long-run relationships, long-run Granger causality and instantaneous causality in light of the global financial crisis (GFC) (2007–2008). Design/methodology/approach The authors use Johansen’s system cointegration approach with structural breaks. Moving average representation is used for common stochastic trend(s) analysis. Finally, the authors apply vector error correction model-based Granger causality and instantaneous causality. Findings Cities’ housing prices are in long-run equilibrium. Post-crisis Canadian housing markets became more integrated. The Calgary, Vancouver, Toronto and Montreal markets drive the Canadian housing market, leading all cities toward long-run equilibrium. Strong long-run Granger causality exists, but the authors observe no instantaneous causality. Price information takes time to disseminate, and long-run price adjustments play a significant role in causation. Practical implications The findings of cointegration increasing after the GFC and strong lead–lag can be used by investors to arbitrage and optimize portfolios. This can also help national and local policymakers in mitigating risk. Incorporating these findings can lead to better price forecasting. Originality/value This study presents many novelties for the Canadian housing market: it is the first to use repeat-sales regional pricing indices to test long-run behaviors, conduct common stochastic trend analyzes and present causality relations.

scholarly journals Housing Price and Population Changes: Growing vs Shrinking Cities

2018 ◽  
Vol 7 (4) ◽  
pp. 59
Author(s):  
Yalan Feng ◽  
Taewon Kim ◽  
Daniel C Lee
Keyword(s):  
Housing Market ◽  
Recovery Period ◽  
Housing Prices ◽  
Housing Price ◽  
The United States ◽  
Population Changes ◽  
The Great Recession ◽  
Population Variable ◽  
Mortgage Rates ◽  
The Relationship

Housing prices in the United States experienced a significant meltdown during the Great Recession. Since then, the housing market has seen a nationwide recovery, even over-heating in some regions. In this paper, we look back at that era and study the possible impact of population changes on housing markets in 2010-2017. Our focus is not to look at how the housing market recovered from the recession per se. Rather, our study is to look at the relationship between population changes and their impact on housing prices, even during the recovery period. In addition to the population variable, our model employs a few other factors known to affect housing prices, such as the unemployment rate, the GDP per capita, mortgage rates and the housing supply.

scholarly journals HOUSING AFFORDABILITY IN THE STATE OF JOHOR

2017 ◽  
Vol 15 ◽  
Author(s):  
Mariana Mohamed Osman ◽  
Muhammad Adib Ramlee ◽  
Nasriah Samsudin ◽  
Noor Suzilawati Rabe ◽  
Muhammad Faris Abdullah ◽  
...  
Keyword(s):  
Affordable Housing ◽  
Housing Prices ◽  
Housing Price ◽  
Housing Affordability ◽  
The State ◽  
Property Market ◽  
Population Changes ◽  
Demand And Supply ◽  
Economic Theories ◽  
Income Ratio

The Malaysian property market has been facing significant changes in terms of housing price since a decade ago and these changes are different between states. The changes in housing prices are being supported by the economic theories of demand and supply as well as the regional economic and demographic factors such as income level, housing supply stock, speculative buying and population changes. This paper provides an overview of the affordable housing policy and elaborates on the housing affordability index for the districts in the State of Johor. Using datasets for year 2012 and 2014 in order to determine the median multiple of price-income ratio, this paper found that housing in all the districts were generally unaffordable. Some districts recorded HAI of severely unaffordable, while others in the seriously and moderately unaffordable index categories.

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