Demand shocks and price stickiness in housing market dynamics

Fan, Ying

doi:10.1016/j.econmod.2022.105820

Cited by 6 publications

(4 citation statements)

References 59 publications

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“…The results indicate that housing market reactions to positive and negative shocks may differ and generally align with the literature. We found that the reaction to exogenous shocks is not swift, as house prices were sticky in response to mortgage interest rate increases -results confirmed by several studies (Erlandsen & Juelsrud, 2023;Fan, 2022). The results also align with prior research suggesting that changes in lending conditions have an asymmetric effect on house prices (Armstrong, et al, 2019;Chatziantoniou et al, 2017).…”

Section: Discussionsupporting

confidence: 89%

“…The sluggish response of prices to exogenous shocks, a property also referred to as sticky pricing, has also been addressed theoretically and empirically in housing literature and is typically linked to loss aversion behavior (Genesove & Mayer, 2001. The results from other studies reveal that sticky house prices may exacerbate housing market fluctuations and delay housing market convergence (Fan, 2022), with both properties having profound policy implications. Understanding the asymmetric responses of house prices to exogenous shocks may contribute to better forecasting and more effective policymaking (Katrakilidis & Trachanas, 2012).…”

Section: Literature Reviewmentioning

confidence: 99%

“…The effectiveness of this transmission mechanism differed between countries with different average house price growth rates. A recent Chinese study has also reported the asymmetric property of housing market adjustment to exogenous shocks in booming and cooling market regimes (Fan, 2022).…”

Section: Literature Reviewmentioning

confidence: 99%

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Supply, Demand and Asymmetric Adjustment of House Prices in Poland

Gluszak,

Trojanek

2024

Real Estate Management and Valuation

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In recent years, a lot of empirical effort has been made to search for potential nonlinear responses of house prices to various demand and supply factors. This paper examines Poland's heterogeneous regional housing market reactions to key economic variables from 2000 to 2022. The study raises two research questions related to the asymmetric adjustment of housing markets to selected demand and supply shocks. Firstly, we ask whether the house price adjustments to negative shocks are relatively minor (for example, during an economic downturn) when compared to positive shocks (prevalent in booming markets), mainly due to the loss aversion behavior theory and nominal rigidity of house prices. In particular, we test the hypothesis that house prices react more to positive impulses from supply and demand than negative ones. Secondly, we investigate whether market reactions are similar for large and small metropolitan markets. The second hypothesis posits that metropolitan housing markets adjust asymmetrically to demand and supply shocks based on the city size (population and housing stock in a given city). The study uses a nonlinear ARDL model to test the research hypotheses empirically. This paper provides new insights into the nonlinear reactions of house prices to exogenous shocks and adds to the limited empirical evidence from less developed economies.

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Section: Discussionsupporting

confidence: 89%

Section: Literature Reviewmentioning

confidence: 99%

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Supply, Demand and Asymmetric Adjustment of House Prices in Poland

Gluszak,

Trojanek

2024

Real Estate Management and Valuation

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“…Hargitay and Yu (1993) proposed that all investments exist somewhere on a spectrum ranging from absolute uncertainty to absolute certainty, noting that both extremes are improbable in real-world conditions. Whilst it is true that significant unexpected shocks can impact all countries and sectors to a large extent (Fan, 2022), the distinct composition of each country's property sector and the diversity of policy responses to these shocks lead to differential effects (Fackler and McMillin, 2015;Gallimore and Gray, 2002). Moreover, the prominence of uncertainty as a critical consideration tends to be more pronounced in settings characterised by lower levels of market maturity and informational efficiency (Fereidouni and Masron, 2013;Lo et al, 2022;Maitland and Sammartino, 2015).…”

Section: Collaboration Network and Citation Analysismentioning

confidence: 99%

Economic uncertainty and direct property performance: a systematic review using the SPAR-4-SLR protocol

Ahiadu,

Abidoye

2023

JPIF

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PurposeThis study systematically reviewed existing literature on the impact of economic uncertainty on property performance to highlight focus areas and spur future research amid unprecedented global uncertainty levels. Conceptually, uncertainty levels and environmental dynamism are related to investors' risk judgement and decision-making.Design/methodology/approachPeer-reviewed journal articles published from 2007 to 2022 were assembled and arranged through the Scientific Procedures and Rationales for Systematic Literature Reviews (SPAR-4-SLR) protocol. The initial search produced 2,028 results from the Web of Science and Scopus databases, which were rigorously purified for a final dataset of 70 articles. These records were subsequently assessed through content analysis, bibliographic modelling, topic modelling and thematic analysis. Recurring themes were visualised using the VOSviewer software.FindingsThe existing literature suggests that economic uncertainty negatively impacts investment volumes, returns and performance. Research has also increased since 2018, with a strong emphasis on the housing sector and developed property markets. Commercial property and emerging markets account for only 10 and 8% of previous research, respectively.Practical implicationsThese findings highlight the negative impact of economic uncertainties on property performance and investment volumes, which necessitate careful risk assessment. Given the high susceptibility of emerging and commercial property markets to uncertainty, these markets warrant further research amid ongoing uncertainty concerns across the globe.Originality/valueGiven current unprecedented levels of global uncertainty, the effects of economic uncertainty have received renewed interest. This study synthesised the current understanding of how different property markets respond to increased uncertainty and outlined future research directions to enhance understanding. Themes and relationships were also integrated into a conceptual map summarising the reported effects of economic uncertainty on housing, commercial property, investment and behaviour in the property market.

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Firm financialization and cost stickness behavior

Sun

Gong

2023

Finance Research Letters

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Demand shocks and price stickiness in housing market dynamics

Cited by 6 publications

References 59 publications

Supply, Demand and Asymmetric Adjustment of House Prices in Poland

Supply, Demand and Asymmetric Adjustment of House Prices in Poland

Economic uncertainty and direct property performance: a systematic review using the SPAR-4-SLR protocol

Firm financialization and cost stickness behavior

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