Advanced Search
MyIDEAS: Login

Over-Confidence and Cycles in Real Estate Markets: Cases in Hong Kong and Asia

Contents:

Author Info

Registered author(s):

Abstract

Studies on the calibration of subjective probabilities find that people tend to over-estimate the precision of their knowledge. In this paper we develop a semi-rational model and apply it to the real estate markets in Hong Kong and other Asian countries. The key point is that a person is rational about her/his private information until her/his private information is confirmed by a clearly defined market signal. Using a pre-sale as a mechanism of updating a developer's beliefs, this paper analyzes the impact of over-confidence on overbuilding and cycles in real estate markets. Our finding indicates that a pre-sale activity will increase the magnitude of over-building and over-confidence will increase the volatility in real estate markets. Our model also has implications to the well-established literature dealing with the issue of over-capacity in many industrial sectors.

Download Info

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
File URL: http://www.umac.mo/fba/irer/papers/past/vol3_pdf/093-108HK-2000.pdf
File Function: Full text
Download Restriction: no

Bibliographic Info

Article provided by Asian Real Estate Society in its journal International Real Estate Review.

Volume (Year): 3 (2000)
Issue (Month): 1 ()
Pages: 93-108

as in new window
Handle: RePEc:ire:issued:v:03:n:01:2000:p:93-108

Contact details of provider:
Postal: Asia Real Estate Society, 51 Monroe Street, Plaza E-6, Rockville, MD 20850, USA
Email:
Web page: http://www.asres.org/

Order Information:
Postal: Asian Real Estate Society, 51 Monroe Street, Plaza E-6, Rockville, MD 20850, USA
Email:
Web: http://www.asres.org/

Related research

Keywords:

Find related papers by JEL classification:

References

No references listed on IDEAS
You can help add them by filling out this form.

Citations

Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
as in new window

Cited by:
  1. Charles Ka Yui Leung, 2004. "Macroeconomics and Housing: A Review of the Literature," Discussion Papers 00004, Chinese University of Hong Kong, Department of Economics.
  2. Charles Ka Yui Leung & Kelvin S. Wong, 2004. "The Construction and Related Industries in a Changing Socio-Economic Environment: The case of Hong Kong„X," Discussion Papers 00011, Chinese University of Hong Kong, Department of Economics, revised May 2005.
  3. Charles Ka Yui Leung & Wei Wang, 2007. "An Examination of the Chinese Housing Market through the Lens of the DiPasquale- Wheaton Model: a Graphical Attempt," International Real Estate Review, Asian Real Estate Society, vol. 10(2), pages 131-165.
  4. Caliendo, Frank & Huang, Kevin X.D., 2008. "Overconfidence and consumption over the life cycle," Journal of Macroeconomics, Elsevier, vol. 30(4), pages 1347-1369, December.
  5. Chien-An Wang & Chin-Oh Chang, 2008. "Is It a Heavy Log that Broke the Camel’s Back? Evidence of the Credit Channel in Taiwan’s Construction Industry," International Real Estate Review, Asian Real Estate Society, vol. 11(1), pages 38-64.
  6. Su Han Chan & Fang Fang & Jing Yang, 2008. "Presales, Financing Constraints and Developers?Production Decisions," Journal of Real Estate Research, American Real Estate Society, vol. 30(3), pages 345-376.
  7. Leung, Charles Ka Yui & CHEUNG, W. Y. Patrick & TANG, C. H. Edward, 2011. "Financial Crisis and the Comovements of Housing Sub-markets: Do relationships change after a crisis?," MPRA Paper 31627, University Library of Munich, Germany.
  8. Su Han Chan & Ko Wang & Jing Yang, 2003. "Pricing Factors in Real Estate Markets: A Simple Preference Based Approach," International Real Estate Review, Asian Real Estate Society, vol. 6(1), pages 102-120.
  9. Leung, Charles Ka Yui & Tang, Edward Chi Ho, 2013. "Speculating China economic growth through Hong Kong? Evidence from the stock market IPO and real estate markets," MPRA Paper 46346, University Library of Munich, Germany.
  10. Su Chan & Ko Wang & Jing Yang, 2012. "Presale Contract and its Embedded Default and Abandonment Options," The Journal of Real Estate Finance and Economics, Springer, vol. 44(1), pages 116-152, January.
  11. Su Han Chan & Ko Wang & Jing Yang, 2011. "A Rational Explanation for Boom-and-Bust Price Patterns in Real Estate Markets," International Real Estate Review, Asian Real Estate Society, vol. 14(3), pages 257-282.

Lists

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

Statistics

Access and download statistics

Corrections

When requesting a correction, please mention this item's handle: RePEc:ire:issued:v:03:n:01:2000:p:93-108. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (IRER Graduate Assistant/Webmaster).

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.