Content area
Full text
J Real Estate Finan Econ (2008) 37:299316 DOI 10.1007/s11146-007-9070-6
Published online: 24 July 2007 # Springer Science + Business Media, LLC 2007
Abstract We argue that shocks to a housing market are transmitted through the hierarchy of quality tiers within a housing market. The result is the prediction of waves of house price changes accompanied by changes in transaction volume. Our study is related to existing models of spatial ripple effects across housing markets. The data are from the Hong Kong housing market. The findings from Granger causality tests strongly support the argument that domino effects within a single housing market occur in response to external shocks.
Keywords Housing . Homeownership . Ripple effect . Downpayment . Price dynamics . Equity effects . Public housing . Privatization . Domino effect
JEL Classification E32 . H30 . R21 . R31
Introduction
Housing market dynamics are complex. Theoretical approaches include models of neighborhood change, filtering, urban growth, and housing chains. Empirical tests of these models are relatively infrequent, perhaps due to the complexity of the models or the lack of data. However, given the importance of home equity to national wealth and the importance of housing to urban and national economies, there is a need for studies of house price and transaction dynamics.
: Y. Ma
Domino Effects Within a Housing Market: The Transmission of House Price Changes Across Quality Tiers
Lok Sang Ho & Yue Ma & Donald R. Haurin
L. S. Ho (*)
Department of Economics, Lingnan University, Tuen Mun, Hong Kong e-mail: [email protected]
Y. Ma
Macroeconomic Research Centre, Xiamen University, Xiamen, China e-mail: [email protected]
D. R. Haurin
Department of Economics, Ohio State University, Columbus, OH, USA e-mail: [email protected]
300 L.S. Ho, et al.
Our study focuses on the interrelationships of housing submarkets where the submarkets are defined by quality tiers. The application is to Hong Kong, where recent changes in housing policy have provided a natural experiment and data are available. One implication of the empirical findings is that dwelling units of all quality levels are closely tied together through dynamic processes. Another finding is that price effects move through the quality continuum of a housing market with relatively great rapidity. A third is that there is a positive correlation between the turnover of...