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House price overvaluation in Hong Kong: Identifying the market fundamentals and understanding the “Bubble”

Accepted version
Peer-reviewed

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Type

Article

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Authors

Arestis, P 
Gonzalez-Martinez, AR  ORCID logo  https://orcid.org/0000-0002-1198-9681
Jia, LK 

Abstract

jats:sec <jats:title content-type="abstract-subheading">Purpose</jats:title> jats:pThe purpose of this paper is twofold. First, the authors investigate the main drivers of house prices in the Hong Kong housing market. Second, further research is undertaken to confirm the existence of house price overvaluation, which has driven the market into a bubble episode.</jats:p> </jats:sec> jats:sec <jats:title content-type="abstract-subheading">Design/methodology/approach</jats:title> jats:pFirst, the authors propose a theoretical framework to identify the fundamentals of the market. In the second step, they decompose house prices into fundamentals, frictions and bubble episodes for a better understanding of the evolution of house prices during the period 1996(Q3)-2013(Q3).</jats:p> </jats:sec> jats:sec <jats:title content-type="abstract-subheading">Findings</jats:title> jats:pThe results of this paper suggest an eventual possible correction of up to 46 per cent of house prices with respect to their 2013(Q3) level.</jats:p> </jats:sec> jats:sec <jats:title content-type="abstract-subheading">Originality/value</jats:title> jats:pThe originality of this paper is to use the procedure developed by Glindro and Delloro (2010) to analyse the Hong Kong housing market. The contribution of this paper also modifies the original Glindro and Delloro’s (2010) approach by including the Christiano and Fitzgerald (2003) filter to decompose house prices.</jats:p> </jats:sec>

Description

Keywords

Asia, Housing prices, Housing market analysis, Housing affordability, Macroeconomics, Appreciation

Journal Title

International Journal of Housing Markets and Analysis

Conference Name

Journal ISSN

1753-8270
1753-8289

Volume Title

10

Publisher

Emerald