Housing Bubble Research Articles

Housing markets, monetary policy, and the international co‐movement of housing bubbles

AbstractWe analyze whether there was co‐movement in bubbles at the international level from the mid‐1990s to 2018 using a data set of developed and emerging economies. We first identify the markets that were more prone to volatility and speculation before the crisis. Second, we determine and compare the responses of bubbles in housing markets to monetary policy in a Bayesian time‐varying framework. We then study the co‐movement of bubble responses to monetary shocks before and after the crisis using a dynamic factor model. This approach allows us to disentangle a common global factor from factors specific to high/low speculative housing markets.

Which Sectors Really Matter for a Resilient Chinese Economy? A Structural Decomposition Analysis

This study explores the structural effect of economic resilience with a case of China by examining the extent to which the major economic sectors contribute to the relative resilience of China’s overall economy. By applying a time series analysis, we use the Hodrick–Prescott filter to delineate China’s national economy on a quarterly basis and reveal different performances in responding to two recent economic crises in 1997 and 2008. Using quarterly data pertaining to eight economic sectors (including agriculture, industry, and major service sectors) and the national GDP from 1993Q1 to 2017Q2, we examine their effects on China’s economic resilience by simulating the responses of the national economy to a unit shock from each sector. Results show that the construction, real estate, and financial services have the greatest potential to “disturb” the national economy whereas the industrial sector has the greatest potential to “stabilize” it. The findings correspond with the understanding that extensive infrastructure development and the real estate boom have driven China’s rapid urban development and created economic prosperity, whereas the sectoral decomposition of economic resilience compels a critical reflection on the risks of this growth model.

The Effect of Housing Prices on Bank Performance in Korea

This study analyzes the relationship between housing prices and bank performance in Korea. To this end, using lending growth, return on assets, and non-performing loans as a performance measure, we estimate fixed-effects models for each measure. Major empirical results are summarized as follows. First, fluctuations in housing prices affect the banks’ lending decisions. If housing prices rise, banks tend to increase the volume of loans. Second, fluctuations in housing prices affect the quality of assets owned by banks. Banks’ asset soundness will improve in the case of a rise in housing prices. Third, fluctuations in housing prices have a greater impact on bank profitability when the real estate market goes bust. Our study suggests that in Korea, one of the emerging markets, there is a positive relationship between changes in housing prices and banks’ performance. In particular, banks’ profitability and soundness could be significantly hampered by a drop in housing prices. Therefore, it is necessary to be wary of excessively expanding real estate loans during the period of real estate booms.

Speculative homemaking: Women’s labour, class mobility and the affect of homeownership in South Korea

Since the 1960s, urban South Korea has seen a series of real estate booms characterised by a huge surge in the construction of apartment complexes and skyrocketing housing prices. In this environment, many South Koreans have begun to view their homes as a source of profit-making. Through in-depth interviews, I examine how women in South Korea have emerged as agents of this urban transformation by engaging in ‘speculative homemaking’, an activity that merges the domestic work of household management with the work of real estate speculation. This article investigates how South Korean women’s gendered practices are embedded in the larger landscape of women’s work for class mobility and reproduction, highlighting class-divergent pathways to homeownership that are propelled by distinct affect – fear, anxiety and ease. Demonstrating how speculative logic pervades the domestic and the everyday, this article foregrounds the significance of gendered labour and affect for the study of urban processes and class formation.

Comparison of advanced economies’ performance in bubbles mitigation

Purpose This paper aims to analyze the effectiveness of macroprudential and fiscal policies taken from a sample of ten advanced economies in relation to the mitigation of real-estate and credit bubbles by comparing their performance. Design/methodology/approach This comparison is elaborated with a seemingly unrelated regression methodology, which allows the assessment of individual countries’ performance and improves the estimation of the dependent variables versus an individual regression. Findings The analysis concludes that countercyclical measures have been more effective to control the growth of household debt. Furthermore, this study validates that macroprudential measures focused on the residential sector meet their objective of controlling the growth of house prices, whereas those macroprudential measures with more generic targets are effective to control the growth of household debt. Originality/value As opposed to previous panel-regression studies, which have analyzed the performance of macroprudential and fiscal measures in generic terms, this paper compares the performance of these tools in ten advanced economies. Based on the analysis performed, several recommendations are derived for policymakers.

The inequality-housing price nexus in tourist resorts: theory and evidence

ABSTRACTFast expansion in casino gaming is widely perceived as an underlying reason for housing bubbles in tourist resorts such as Macao. Yet it remains unclear whether such bubbles have any bearing on income inequality that comes with tourism expansion. This paper provides a formal explanation for the inequality-housing price nexus by using a vector autoregressive model with exogenous variables (VARX) and an autoregressive distributed lag model (ARDL). We find that casino tourism expansion plays a fundamental role for both income inequality heightening and housing price hiking, with rising inequality also contributing significantly to housing bubbles. Our empirical findings accord well with theoretical predictions made in this paper. Useful policy implications can then be derived from those findings.

중국 양적완화 정책에 따른 부동산버블과 은행대출간 실증연구

중국 양적완화 정책에 따른 부동산버블과 은행대출간 실증연구

Intrinsic bubbles and Granger causality in the Hong Kong residential property market

This study uses the intrinsic bubbles detection method to identify housing bubbles in the Hong Kong residential property market. By using sample period data from 1993 to 2019, the empirical results show evidence of intrinsic bubbles. Based on the unit root and co-integration tests, I found that there are no rational speculative bubbles in the Hong Kong residential property market. Furthermore, by using the Granger causality tests of the corresponding asymmetric VECM specification, there is no causality from lagged changes in the rental price returns to changes in the property price returns. However, there is strong evidence to show that changes in the property price index returns can Granger cause changes in the rental price index returns.

Australian local governments and affordable housing: Challenges and possibilities

For an increasing proportion of Australian households, the Australian dream of home ownership is no longer an option. Neoliberal housing policy and the financialisation of housing has resulted in a housing affordability crisis. Historically, Australian housing policy has afforded only a limited role to local government. This article analyses the results of a nation-wide survey of Australian local governments’ perceptions of housing affordability in their local government area, the possibilities for their meaningful intervention, the challenges they face, the role of councillors and councils’ perceptions of what levels of government should take responsibility for housing. Almost all of the respondents from Sydney and Melbourne councils were clear that there is a housing affordability crisis in their local government area. We apply a framework analysing housing policy in the context of neoliberalism and the related financialisation of housing in order to analyse the housing affordability crisis in Sydney and Melbourne. We conclude that in order to begin resolving the housing crisis in Australia’s two largest cities there has to be an increasing role for local government, a substantial increase in the building of social and affordable housing and a rollback of policies that encourage residential property speculation. JEL Codes: R31, R21

Entre el banco, la casa y la PAH: una visión de la cotidianeidad en crisis a través de la lucha de las personas afectadas en Bonavista (Barcelona)

La gran recesión del 2008 fue un evento singular en la historia reciente del Estado español. El “pinchazo” de la burbuja inmobiliaria y la destrucción masiva de empleo que trajo consigo pusieron de manifiesto la crisis profunda del capitalismo hispano. En Bonavista el paro y la consiguiente incapacidad de la gente trabajadora para pagar su deuda hipotecaria dieron lugar al ejercicio de una presión asfixiante por parte del sector financiero y a una reconfiguración de la cotidianeidad de las personas afectadas, que tuvieron que subordinar las relaciones sociales y la dedicación que hace falta para mantenerlas y para aumentarlas a la lógica de la expropiación de riqueza. En este contexto, la Plataforma de Afectados por la Hipoteca (PAH) surge como un refugio donde las personas afectadas reclaman la primacía de sus proyectos de vida frente a la pretendida hegemonía de la banca.

Sobrendeudamiento, ejecuciones hipotecarias y cuestionamiento de la legitimidad de las deudas

Como consecuencia de la crisis económica, inmobiliaria y financiera experimentada en España en los últimos años, muchos deudores hipotecarios no pueden hacer frente a sus cuotas y corren el riesgo de perder sus viviendas, en ocasiones conservando una deuda imposible de afrontar. El sobrendeudamiento y la morosidad hipotecaria abocan así a ciertas economías domésticas a situaciones insostenibles que pueden llevar a una reordenación de los gastos y necesidades, entre los que las cuotas hipotecarias dejan de tener prioridad. La legitimación de la condición de moroso que puede observarse en esos casos es un fenómeno con importantes implicaciones antropológicas, en la medida en que constituye un cuestionamiento de la obligación de devolver el préstamo. Desde el punto de vista de los deudores y de quienes les brindan apoyo, caer en el impago, lejos de constituir una transgresión moralmente reprobable, puede entenderse como un acto de responsabilidad que tiende al sostenimiento de la vida.

Urban social vulnerability and climate change in Rio de Janeiro city associated with population mobility

ABSTRACTThis article intends to verify how climate change vulnerability and population mobility are related and how they are spatially distributed in the city of Rio de Janeiro. Rio de Janeiro is among the Brazilian metropoles covering the largest urban agglomerations and containing the most vulnerable areas to the effects of climate change. In addition, the city also has one of the worst indicators for daily intra-urban travel in Brazil. Mobility and vulnerability are related through processes inherent to the formation of the occupation of urban space, such as property speculation, the evolution of the means of transport, and access to urban functions. Using Factorial Analysis and geoprocessing techniques, a Climate Change Vulnerability Index was created and spatialized with socio-economic, environmental, infrastructure, and transport dimensions. It was found that the historical processes which induced socio-spatial segregation are still reflected in the present day, through levels of population vulnerability. Among the research results is the need for the integration of urban policies and adaptive measures, principally in relation to housing and transport policies, which, in addition to be advantageous, are shown to be extremely important to increase the local adaptation capacity of the urban population to climate change.

Developing financial competence about mortgage loans by informal learning using banks\u2019 online calculators

Background and aimFinancial literacy (or financial competence) has become an internationally relevant and highly regarded topic. Since people often lack sufficient financial competence, in many countries efforts have been made to foster formal financial education. Less attention, however, has been paid to whether informal learning using information available on the Internet can also support the development of financial competence. However, this seems to be an important question because the Internet has expanded the opportunities for informal learning. In addition, people need to acquire financial competence on their own because not every financial topic relevant in one’s lifetime is covered in formal education syllabi. Against this background, in this study we tested whether people are able to develop financial competence by learning informally using information available on the Internet. We focused on mortgage loans, as they are comparatively complex financial products. Mortgage loans have the potential to significantly influence an individual’s financial situation. In addition, society might carry the burdens of risky and uninformed decisions about mortgage loans—as the financial and real estate crisis has shown.Method45 students of economics and business studies in their final undergraduate year participated. They were randomly assigned to an experimental or a control group. The experimental group explored information about mortgage loans using the loan calculator of a German bank. The control group did not explore webpages. Before the intervention, students from both groups completed knowledge tests and self-assessed their financial knowledge and behaviour. After the intervention, students had to work on a case and to decide whether a small family should take out a mortgage loan for financing a house. The decision had to be justified. In addition, students were administered an immediate and delayed knowledge test.Results and conclusionsStudents of both groups did not differ in knowledge acquisition, decision making about taking a mortgage loan and argumentation quality. However, prior knowledge can be referred to in order to explain the results. Therefore, informal learning using the Internet did not seem to be effective if people did not have sufficient prior knowledge. This result underlines, on the one hand, the necessity of financial education—be it prior to informal learning or in the course of informal learning. On the other hand, the results can be interpreted as a hint to consider how to improve informal learning activities, e.g. by supporting self-regulation or by improving information material.

Long-Term and Short-Term House Price Dynamics in China’s First Tier and Second Tier Main 13 Cities

This article identifies the main drivers and assesses housing bubbles in China’s first-tier and second-tier main 13 cities’ aggregated house prices for 2007Q2 through 2018Q4. The empirical analysis is conducted using robust econometric multiple frameworks, undertaken using the forms of OLS and VECM techniques. The outcomes suggest that house prices attain a long-run equilibrium every 7.14 quarters, with a short-term correction by their own macroeconomic forces including share performance, interest rate, and GDP. Our findings suggest the three macroeconomic drivers identified are effective to stabilize the housing markets. Governments could reduce large fluctuations on house prices and balance the countries’ housing market, share market, and economic growth via setting appropriate monetary policies. In addition, real estate businesses and construction industries and households could set accurate finance plans and budgets to improve their resilience to economic shocks.

Imbalanced sex ratios and housing prices in the U.S.

AbstractThis paper investigates whether imbalanced local sex ratios are associated with housing prices in the U.S. at the county level during the period 2000–2017, based on the hypothesis that the importance for men of advertising financial resources by spending more on housing increases in the marriage market where there is a scarcity of women. The results indicate that an increase of 0.1 in sex ratio is associated with approximately a 2% increase in housing prices, suggesting that men may allocate more resources toward mating effort by increasing their spending on housing when there is an abundance of men. There is little evidence that the positive association was greater during the housing bubble.

Challenges and Frustration of the Mediterranen City, Barcelona:

Contemporary urban network consists of a whole set of multilevel urban systems, of which the global and the national constitutes the most outstanding but not exclusive scales, always superposed and interacting among them. The concept of second city, therefore, can never be separated from specific urban system(s) of reference, whose spatial dimension, hierarchical structure and linkage to other systems, on both upper and lower directions, determine the relative position of the city in question. To understand the dynamics of a second city, we should also take into account the socio-political opportunities and constraints that emanate from human experience shared along the history, usually on national and regional levels. Those can act as path dependent factors affecting the cityʼs strategical decision making. Multilevel in urban network and path dependency are the key aspects considered in this article, which focusing on the case of Barcelona, contributes from a geographical perspective to our common inquiry concerning the evolution of second cities. The discussion starts reviewing some classic works in geopolitics to draw clues to set Barcelona as a second city, in both Spanish urban system headed by Madrid and the extensive Mediterranean urban network. Although statistical data allow us to rate the two Spanish urban agglomerations at a secondary position integrated in the whole European urban system, institutional and infrastructural constraints posed by the national capital push the second city on the Iberian fringe to seek for alternative ascending paths in the international context. Severely affected by the bursting of the Spanish real estate boom and with a local economy dependent more than ever on the tourism sector, Barcelona today keeps struggling to build its own strength, making the most of its ability to connect multilevel urban networks.

Real estate bubbles in a bank-real estate loan network model integrating economic cycle and macro-prudential stress testing

The real estate industry plays a decisive role in the national economy. Once real estate bubbles burst, it will trigger the turbulence of the whole economic system and even lead to serious economic crisis. From the perspective of macro-prudential stress testing, this paper constructs a risk contagion model of bank-real estate loan network. With the help of the data of 136 banks that provided loans for the real estate industry from 2012 to 2017, a macro-prudential stress testing is conducted on the bank-real estate loan system and real estate bubbles. The main conclusions are as follows: (1) Asset depreciation coefficient, bank panic coefficient and bank leverage rate have little impact on the stability of the banking system and the state of real estate bubbles, but the scale of bank assets has a significant impact on them in the whole economic cycle. (2) During the recession period, when China’s banks that are “too big to fail” have not been subjected to excessive shocks, the entire banking system will remain relatively stable and real estate bubbles will not burst. (3) Compared with the recession period, the bank survival ratio is higher under the influence of asset depreciation coefficient, bank panic coefficient and bank leverage rate in the recovery period. And the probability of the system being completely robust increases under the influence of the scale of bank asset, while the probability of being extremely vulnerable decreases. (4) Compared with the recession and recovery period, the bank survival ratio is higher under the influence of asset depreciation coefficient in overheating period, and it is lower under the influence of bank panic coefficient and bank leverage rate. Moreover, under the influence of the scale of bank assets, the probability of the system being completely robust increases, while the probability of being extremely vulnerable decreases. (5) The banking system has significant hierarchical and functional differences in China. It reflects that China should focus on large state-owned banks and joint-stock banks when preventing real estate bubbles from breaking up.

Confronting Spain’s crises: from the language of the plazas to the rise of Podemos

ABSTRACTIn 2010, on the heels of the global financial crisis, two major crises hit Spain as its massive real estate bubble burst. The first was economic and had disastrous effects in all sectors of Spanish society. The second was a crisis of political legitimacy which called into question the validity of the very political institutions created during the transition from the Francoist dictatorship to democracy. What is particularly unique about Spain’s contemporary experience is that the financial crisis, by putting people in serious economic peril, opened a dialogue about the lost opportunities in the transition from fascism to democracy. The rapid politicization of a massive component of Spanish society post-crisis amounted to a collective awakening, best captured by a popular slogan of protest in 2011 ‘dormíamos, despertamos.’ Tracing some the history of the language of the plazas from Spain’s most important post-crisis protests to the language of institutional change, reveals both the profound effects of the global financial crisis as well as the cultural and generational shift in the contemporary political arena. This paper analyzes the way in which these new movements present a alternative to the political narrative.

La burbuja inmobiliaria de la “década prodigiosa” en España (1997-2007): políticas neoliberales, consecuencias territoriales e inmunodeficiencia social. Reflexiones para evitar su reproducción

The article’s subject matter arises in response to the bewilderment caused by the indications that point to the possible incubation of a new real estate bubble in Spain that could reproduce, in the medium term, the characteristic symptomatology of the “prodigious decade of expansive urbanism” (1997-2007). Verifying such indications, exposing the causes that have allowed the territorial excesses of those years to occur, pointing out the applied principles of economic policy and verifying that the territorial inheritance received carries an urban planning captive of the interests of the real estate market, conform the discursive framework prior to the approach of the central theme of the article: to conduct a taxonomy of the immunodeficient attitude shown by the Spanish society in light of such excesses, as, to liberate us from our dependence on real estate capitalism, a substantial mutation of this pathogenic conduct is needed to drive critical thinking and social reflectiveness.

La burbuja inmobiliaria de la “década prodigiosa” en España (1997-2007): políticas neoliberales, consecuencias territoriales e inmunodeficiencia social. Reflexiones para evitar su reproducción

El presente artículo surge en respuesta al desconcierto causado por los indicios que apuntan a la posible incubación de una nueva burbuja inmobiliaria en España, que podría reproducir, a medio plazo, la sintomatología característica de la “década prodigiosa del urbanismo expansivo” (1997-2007). Verificar tales indicios, exponer las causas que alentaron los excesos territoriales de aquellos años, apuntar los principios de política económica aplicados y constatar que la herencia territorial recibida es consecuencia de un planeamiento urbano cautivo de los intereses del mercado inmobiliario, conforman el marco discursivo previo al abordaje del tema central del artículo: realizar una taxonomía de la actitud inmunodeficiente mostrada por la sociedad española ante tales excesos, toda vez que, para liberarnos de nuestra dependencia del capitalismo inmobiliario, se precisa una mutación sustancial de esta conducta patógena que impulse el pensamiento crítico y la reflexividad social.