Assisted homeownership, investment and their roles in private property price dynamics in Hong Kong

“…Barot and Yang (2002) [26] used the error correction model to compare and analyze the relationship between house prices and investment in Sweden and the United Kingdom. Research by Hui and Yu (2012) [27] showed that house prices in Hong Kong are closely linked to investment needs. Studies by Han and Lu (2017) [28] showed that the rise in house prices has a negative net effect on business investments, thus impeding economic growth.…”

Section: Literature Reviewmentioning

confidence: 99%

Research on the Influence of Real Estate Development on Private Investment: A Case Study of China

Guo

et al. 2018

Sustainability

View full text Add to dashboard Cite

Private investment in China, as a developing country, is an important source of financing for Chinese SMEs (Small and Medium-Size Enterprises) and has played a major role in the development of the real economy. However, in 2016, the growth rate of private investment in China dropped from 10.18% to 3.17%, which had a significant impact on the real economy. At the same time, China’s real estate market has developed rapidly, attracting a large number of capital inflows. The relationship between real estate development and private investment in China is worth considering. This study first, theoretically analyzes the influence mechanism of real estate industry on private investment, pointing out that within a modest development range, the development of real estate industry can promote private investment through the industrial linkage, urbanization, and balance sheet effects, but when real estate is overdeveloped, it has an inhibitory effect on private investment through vampire effect, raising costs and reducing demand effect. In other words, real estate has different effects on private investment in different developmental periods. Therefore, there is a non-linear relationship between the two variables. Second, the relevant provincial panel data of 31 provinces in mainland China from 2003 to 2015 were selected. Using the dynamic panel system Generalized Method of Moments (GMM), this study estimated the correlation between real estate development and private investment. The empirical results showed that the development of the real estate industry has a significant impact on the level of private investment; the two showing an “inverted U-shaped” relationship. At present, in some provinces in China, the real estate industry has exceeded the inverted U-shaped threshold. To boost the vitality of private investment in promoting real economic growth, the development of the real estate industry should be restricted, and house prices should be properly regulated.

show abstract

“…The price indices of used houses of the former three regions are representative of the various market prices and are approved by international academic journals (Hyun Bang Shin 2009; Pei-Fen Chen, Mei-Se Chien, and Chien-Chiang Lee 2011; Hui and Ka Hung Yu 2012). Among them, Sinyi's house price index in Taiwan has been adopted by Chen, Chien, and Lee (2011), the private property price index in Hong Kong has been adopted by Hui and Yu (2012), and the sales price index for dwellings in Korea has been used by Shin (2009). Thus, the price indices of used houses in these three regions have international authority.…”

Section: Scope Of the Datamentioning

confidence: 99%

Nonlinear short-run adjustments between house and stock prices in emerging Asian regions

2018

View full text Add to dashboard Cite

This study uses the powerful nonparametric cointegration test to examine whether nonlinear cointegration exists between prices of used houses and corresponding stock markets in China and the four Asian Tigers. Then, it uses the smooth transition vector error-correction model (STVECM) to explore the adjustment efficiencies of the short-run house and corresponding stockreturn dynamics when there is disequilibrium between house and stock prices. The empirical results indicate that there is a nonlinear cointegration between the house prices and corresponding stock prices in China, South Korea, Singapore, and Taiwan, and that the speed of price adjustment to equilibrium is always greater for houses than stocks when there are large positive and negative deviations. Moreover, the short-run speed of adjustment of the large negative and positive deviations is equal in China, South Korea, and Taiwan, but unequal in Singapore. With the exception of South Korea, the results of the Granger causality test indicate that stock prices clearly lead used house prices, which means a wealth effect exists in most Asian countries. Our study confirms that the STVECM can be used to analyze the short-run adjustment efficiency of house and stock return dynamics in China, South Korea, Singapore, and Taiwan; thus, supporting models of interaction between noise and arbitrage traders.

show abstract

Assisted homeownership, investment and their roles in private property price dynamics in Hong Kong

Cited by 9 publications

References 41 publications

Liquidity risk and cross-sectional return in the housing market

Liquidity risk and cross-sectional return in the housing market

Research on the Influence of Real Estate Development on Private Investment: A Case Study of China

Nonlinear short-run adjustments between house and stock prices in emerging Asian regions

Contact Info

Product

Resources

About