Housing Bubble Research Articles

Impacts of monetary policies on the real estate bubble in Hanoi, Vietnam

The development of the real estate market always goes hand in hand with the fluctuation of the economy. In recent years, this market has experienced many recessions and «freezes» associated with the appearance of a real estate bubble. To approach this issue, this paper studies and gives an overview of the real estate bubble and the impact of monetary policies on the real estate bubble in Vietnam. This paper’s purpose is to identify and measure the influence of monetary policies, including interest rates, credit and money supply, on the real estate bubble in Ha Noi. The vector autoregression model (VAR) is used to test the interaction of the variables in the model. Dickey-Fuller test (DF) is applied to determine the stationarity of the variables, while the Akaike information criterion (AIC), Likelihood Ratio (LR), Final prediction error (FPE), Hannan-Quinn information criterion (HQ) and Schwarz criterion (SC) are used to find optimal lag of the model; then Granger causality test is utilized to determine the two-way correlation between variables. The results showed that the real estate bubble reacted quickly to shocks from macroeconomic factors representing the monetary policy, consisting of interbank interest rates, credit growth, and money supply growth. Thus, it is concluded that monetary policy is not only the cause of formation, but also one of the effective solutions to deflate the real estate bubble. AcknowledgmentThis research is funded by Vietnam Ministry of Education and Training (MOET) under grant number [B2022-NTH-03].

Role of sustainable refurbishment in the perception of quality of life of residential building occupants in Prishtina, Kosovo

PurposeThe aim of this research is to investigate the impact of thermal, acoustic and HVAC upgrades on the perception of the quality of life among residential building occupants.Design/methodology/approachThe present study used a quantitative research approach, utilizing a questionnaire as the research instrument. A survey was conducted with 1,119 residential apartment building occupants in Prishtina, Kosovo, using a stratified random sampling method for selection of participants.FindingsThe present study used quantitative research with a questionnaire as the research instrument. The survey was conducted with 1,119 residential apartment building occupants in Prishtina, Kosovo, using stratified random sampling. The study found that thermal retrofits, acoustic retrofits and HVAC upgrades as a whole model affect the perception of the quality of life of residential building occupants in Prishtina, Kosovo. However, the study found that not all dimensions of the constructed research model (thermal, acoustic and HVAC) affect the perception of the quality of life of residential building occupants. Specifically, thermal retrofitting seems to strongly influence the perception of quality of life, while HVAC upgrades do not seem to have an impact on the quality of life of occupants. Finally, acoustic retrofits also influence the perception of the quality of life, although not to the same degree as thermal retrofitting.Research limitations/implicationsThe present study contributes to understanding the role that thermal retrofits, acoustic retrofits and HVAC upgrades play in the perception of quality of life by building occupants in an understudied region with a booming real estate sector such as Kosovo. The study also highlights the need for further analysis to understand why HVAC upgrades do not seem to influence the perception of quality of life by residential building occupants in Kosovo.Originality/valueThe present study is the first to quantify the impact of thermal, acoustic and HVAC upgrades on the perception of the quality of life of residential building occupants in Prishtina, Kosovo.

Impact of House Price on Economic Stability: Some Lessons from OECD Countries.

Despite having abundant literature blaming a faulty financial system and exuberant‎ price expectations as the primary causes of housing bubbles, there is a lack of research that looks at the impact of house price instability on the economy. This study aims to fill this gap by thoroughly examining the connection between house prices and economic output, and the effect of house price volatility on economic stability. Drawing from long-spanning quarterly data from 17 OECD countries from 1970 to 2019, the study develops and tests economic growth and volatility models to uncover significant insights. The empirical results show that house price returns have a significant asymmetric impact on economic growth, with negative returns having twice the effect of positive ones. Moreover, the results indicate that house price volatility significantly contributes to economic instability. In light of these findings, the paper concludes with valuable policy recommendations to enhance the housing market and improve overall economic stability. This study provides a compelling argument for the importance of closely monitoring and regulating the real estate market in order to maintain a healthy and stable economy.

A Study on the Measurement of Real Estate Bubble Based on GSADF: A Case Study of Four Super First-tier Cities in China

The problem of high house prices is particularly prominent in super first-tier cities, and real estate bubbles are affecting the healthy development of the real estate industry. This paper applies the GSADF model to measure the year-on-year sales price indices of new commercial dwellings in four super first-tier cities in China, Beijing, Shanghai, Guangzhou, and Shenzhen, from 2011M01 to 2022M08, to examine the time points when their bubbles occur and burst. Results show that the bubbles in the four cities mainly appear in six time periods, and the maximum values of GSADF statistics all appear in 2013M03-2013M05, and the peak and frequency of the bubbles decrease significantly after 2018. Therefore, this paper suggests that we continue to adhere to the principle of "no speculation in housing"; improve the land use policy and build a multi-level housing supply system and continue to implement city-based regulation and control.

Interpreting China’s overbuilding through a behavioral perspective: The role of developers’ excessive optimism

ABSTRACT Few studies have examined the psychological factors that shape real estate developers’ overbuilding behaviors in China. Through a behavioral lens, this study explores the effect of developers’ excessive optimism on the formation of overbuilding in Ordos City, China. It finds that excessive optimism, manifested by the firm yet unjustified belief in a long-lasting real estate boom, was prevalent among developers who built vacant and unfinished new residential projects in the Dongsheng District, Ordos. It also discovers the crucial roles of the pro-growth local governments and the booming real estate market—including the easy availability of credit, especially the pervasive informal finance—in reinforcing developers’ excessive optimism in Dongsheng. This study confirms the positive effect of market booms on investors’ excessive optimism. Moreover, it sheds light on the role of the state in shaping excessive optimism and reveals that the state’s proactive participation and investment in market transactions can reinforce developers’ over-optimism. This article suggests that studies on excessive optimism should adequately consider its socioeconomic and politico-institutional settings. This study verifies the validity and necessity of adopting a behavioral perspective to interpret China’s overbuilding and calls for further inquiry into the underexplored scholarship at the intersection of behavioral science and real estate development in China.

People’s Republic of China

Following an impressive recovery from the initial impact of the pandemic, China’s growth has slowed significantly in 2022. It remains under pressure as more transmissible variants have led to recurring outbreaks that have dampened mobility, the real estate crisis remains unresolved, and global demand has slowed. Macroeconomic policies have been eased appropriately, but their effectiveness has been diminished by a focus on enterprises and increasingly less effective traditional infrastructure investment rather than support to households. The pandemic and its impacts have also been a setback to economic rebalancing toward private consumption and to reducing greenhouse gas emissions. A slowdown in growth-enhancing reforms against the backdrop of increasing geoeconomic fragmentation pressures stand in the way of a much-needed lift to productivity growth, weighing on China’s medium-term growth potential.

Sonic Boom over land avoidance and the impact on economic feasibility

There has been renewed interest in commercial supersonic air travel in recent years with a number of new efforts being pursued by several companies. They currently advertise entry into service of these new concepts within the next decade. Current regulations do not permit overland operations for supersonic vehicles due to the sonic booms produced during flight. In order to capture a favorable market share, these vehicles will need to serve routes while abiding with the over land boom restrictions. This study presents a comprehensive approach to overland-prohibited supersonic flight routing and route-specific demand forecasting for commercial supersonic air travel, in order to assess the expected market. This also includes the need for the seasonally dependent need to avoid secondary sonic boom exposure of land.

Changing Supply Elasticities and Regional Housing Booms

AbstractDevelopments in U.S. house prices over the past decade mirror those of the 1996–2006 boom. Construction activity has, however, been weak. Using data for 254 U.S. metropolitan areas, we show that housing supply elasticities have fallen markedly in recent years. We find that housing supply elasticities have declined more in areas in which land‐use regulation has tightened the most, and in areas that experienced the sharpest housing busts. Consistent with the declining housing supply elasticities, we find that monetary policy shocks have had a stronger effect on house prices during the past decade than during the previous boom. At the same time, building permits respond less.

A comparative assessment of machine learning methods for predicting housing prices using Bayesian optimization

The valuation of house prices is drawing noteworthy attention due to worldwide financial and real estate crises in the last decade. Therefore, there is an immediate need to design more effective predictive systems of house prices. Indeed, investors, creditors, and governments are all interested in such predictive systems to improve their buying and lending decisions and activities. This study explores the application of artificial intelligence, machine learning, and nonlinear statistical models to house price prediction problems. In that order, we use boosting ensemble regression trees, support vector regression, and Gaussian process regression. Bayesian optimization is implemented in a ten-fold cross-validation framework to determine their respective optimal kernels and parameter values. Four performance metrics are used to evaluate the prediction ability of each predictive system. The experimental results showed that boosting ensemble regression trees performed the best, followed by Gaussian process regression and support vector regression. In addition, all three aforementioned predictive systems outperformed artificial neural networks and multi-variate regression employed in recent work on the same data set. Under this perspective, it is concluded that boosting ensemble regression trees are clear candidates to be considered for operational house price prediction in Taiwan.

Is there a national housing market bubble brewing in the United States?

AbstractWe use a time-varying parameter dynamic factor model with stochastic volatility estimated using Bayesian methods to disentangle the relative importance of the common component in Federal Housing Finance Agency house price movements from state-specific shocks, over the quarterly period of 1975Q2 to 2017Q4. We find that the contribution of the national factor in explaining fluctuations in house prices is critical. We then use a Bayesian change-point vector autoregressive model that allows for different regimes throughout the sample period, to study the impact of aggregate supply, aggregate demand, (conventional) monetary policy, and term-spread shocks, identified based on sign restrictions on the national component of house price movements. While monetary policy and other shocks are found to be quite dominant early on, we find evidence that the national factor has been detached from the identified macroeconomic shocks since 2014, thus suggesting that a “national bubble” might be brewing again in the US housing market.

An Islamic principle-based integrated solution for China’s housing affordability issues

PurposeThis study aims to merge the world’s proven ways of housing finance, including musharakah mutanaqisah, housing cooperatives and real estate crowdfunding, to present an alternative housing unaffordability solution based on the Islamic finance principle. It is intended to reduce the burden of funding for both sides (consumers and developers) and create win–win chances for all stakeholders, including intermediaries. By moving away from debt financing and merging the features of crowdfunding and cooperative, it is hopeful that the burden of home ownership will no longer be the case.Design/methodology/approachThis paper presents the opinions of potential Chinese homebuyers (minority Muslims and most non-Muslims) and a few industry experts toward the proposed model via a mixed research method.FindingsAccording to the findings, the majority of respondents agreed with the proposed paradigm. Just concerned that China’s lack of community culture and trust could pose a major threat to implementation. However, this paper argues that Chinese local governments may perform pilot testing in places where Islamic culture is prevalent. Their unique community culture and fundamental understanding of Shariah law may affect the viability of the proposed model.Originality/valueThe proposed model would increase the applicability of Islamic finance as a way of protecting the social order of communities in the spirit of upholding justice and fairness. A new type of housing loan based on musharakah mutanaqisah may squeeze out the real estate bubble and provide stakeholders with a multidimensional investment channel. In particular, the study identifies the impact of Chinese Islamic financing on government and cultural needs. It presents possible challenges for implementing the proposed model in reality and helps bridge the gap between theory and practice.

Analysis of the Causes of China’s Real Estate Bubble

The real estate bubble has always been the concern of the government and scholars. Especially at the time when the COVID-19 problem is serious and the economy continues to be depressed, our research on the real estate bubble is of great significance. Based on the definition of real estate bubble by different scholars, the analysis of past real estate bubble cases, and the existing literature review, this paper analyzes the current bubble’s situation of China’s real estate, which has become a really serious years ago, and summarizes the possible causes of real estate bubble such as excess liquidity, the overheating economy some sort of bureaucracy problem and so on. Finally, this paper briefly describes the causes of Japan’s financial crisis in the 1990s as well as the government’s solutions, then analyze how China will deal with the real estate bubble at this stage and give out some possible options like methods through inflation legislation or speculation etc.

The Current Situation and Differences of the Real Estate Bubble between China and the United States

With the continuous expansion of real estate bubbles in China and the United States, the two countries' governments have introduced various policies according to their respective national conditions to prevent the bursting of the real estate bubbles. This article describes how the real estate bubbles in China and the United States formed, the status quo, and the differences between the real estate bubbles in China and the United States. Because the economic systems and management methods of China and the United States are very different, studying the differences in real estate bubbles between China and the United States has excellent enlightenment and significance for China.

Systemic risk of Chinese financial institutions and asset price bubbles

Although there has not been a large-scale systemic crisis in China, high-risk financial events have occurred continuously in recent years. This research thus creatively analyzes the determinants of systemic risk for Chinese financial institutions from the view of asset price bubbles. First, we identify bubbles in the China stock and real estate markets on the basis of the generalized sup Augmented Dickey-Fuller (GSADF) model and explain the reasons for bubble formations according to the stage of China's economic development and policies implementation. At this stage, considering the differences in economic development levels of different cities, the real estate bubbles in the first, second and third tier cities and the whole country were innovatively identified. Second, on the basis of the DCG-GARCH-CoVaR model to measure the systemic risk of listed financial institutions in China and to classify institutions, the results show that the main source of such risk is the banking sector. Furthermore, by constructing regression models, stock market bubbles and real estate bubbles both positively correlate with systemic risk throughout the sample period. Meanwhile, the impact of bubbles on the systemic risk of different types of financial institutions was taken into account so that regulators prioritized different types of institutions with different characteristics when faced with decisions. Finally, we provide macro-prudential policy advice to regulators in order to weaken the impact of bubbles on financial stability to avoid systemic crises.

Comparative Analysis of the Indian and Canadian Real Estate Markets

Abstract Financial and real estate crises have been the most prevalent forms of economic catastrophe over the past three decades. In 2008, India endured a financial crisis unprecedented in its history. Canada seems to be creating a real estate bubble recently; Bloomberg Economics puts Canada as the OECD’s second greatest housing bubble in 2019 and 2021. In the case of the Indian real estate bubble, the capital and large cities saw the largest increase in house prices initially, then comparable increase spread gradually to smaller towns and provinces. Thus, this paper conducts a comparative study of the real estate markets in India and Canada and presents a basic analysis of the Canadian real estate market based on the Indian experience with the real estate crisis. Specifically, the article explores the recent economic history and deduces the elements that contributed to the real estate catastrophe. After collecting data and gaining a thorough knowledge of both nations’ real estate markets, the article performs a comparison study employing indices such as the housing index, the corruption rate, and the Business Survey Index (BSI). The research indicates that property prices in Canada are projected to rise because of a significant association between corruption and house prices and a decline in the BSI index. The research provides some recommendations to avert a full-fledged real estate meltdown.

A Review of Factors Affecting Real Estate Value for Property Developers in UAE

The research study aims to examine factors that have influenced the performance of property developers in the construction and real estate sector of UAE and Middle East with a view to identifying the root causes faced by property developers while completing construction projects. The UAE real estate market has witnessed significant losses and is facing a severe downturn, especially after the 2008 international financial crisis. Though the market has slowly managed to recover, real estate development continues to be hindered by several factors. The current study reviews some of the key variables that impact real estate value for property developers in the UAE. It examines factors that influence the price of real estate in the UAE and other countries, such as Kenya, Nigeria, Malaysia, Saudi Arabia, and countries in Europe. The current review shows that property developers must account for the current supply of properties, the prevailing interest rates, crude oil price, investor purchasing power and liquidity, USD exchange rate fluctuations, and regulatory impositions by the Real Estate Regulatory Agency (RERA) when determining the current and prospective value of a property in the Middle East, esp, UAE. Other micro factors that impact the value of property include location, availability of amenities, and property features. The impact of the UAE stock market on property value remains unclear. Furthermore, this research also analyzed relationship in stick market and real estate boom and found positive relation in USA but no such relationship was seen in UAE markets.

Comparison of Real Estate Bubbles in China and Japan

China has experienced a huge housing boom in recent decades. However, many experts point out that since China’s real estate marketization, real estate investment has increased rapidly, real estate prices are gradually rising, and there is a bubble phenomenon in the industry. Some scholars think that China could follow the same solutions as Japan’s towards Japan’s real estate bubble. Thus, the essay will use the method of contrastive analysis, through the comparison of the land system, monetary policies and national development and system of China and Japan to point out the differences in the real situation of the two countries. It is not appropriate for China to copy Japan’s solutions and China needs to make appropriate adjustments according to the national conditions.

ECONOMIC NATURE OF THE “BUBBLE” IN THE INTERNATIONAL REAL ESTATE MARKET

The article is aimed at studying the economic nature and origin of the real estate bubble, its financial and economic impact, and the relevant consequences and risks for international real estate markets. The article also notes that during the boom period, theincrease in supply is driven by the growth of demand for real estate from end users (the real sector of the economy), and during the bust period -by the growth of demand from investors. The oversupply in the market during the period of market saturation is largely due to the investment in real estate that preceded it during the boom. During this period, real estate is no longer seen as a real asset, but rather as a financial asset that generates income without regard to its connection to the real economy.This, together with rising household in-comes and increased mortgage lending, led to the emergence of real estate bubbles.A real estate bubble is defined as a sharp increase in prices and market turnover in the real estate market caused by a significant increase in demand (including speculative demand for the purpose of further sale). The factors contributing to the emergence of the real estate bubble have been identified as follows: sustained high rates of economic growth; high rates of growth of household incomes; increased availability of mortgage lending (lower requirements for borrowers); increased availability of construc-tion lending; and increased investment in real estate.

The Housing Bubble and Consumer Bankruptcy (Part 1)

The Housing Bubble and Consumer Bankruptcy (Part 1)

The Housing Bubble and Consumer Bankruptcy (Part 2)

The Housing Bubble and Consumer Bankruptcy (Part 2)