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House Prices and Bubbles in New Zealand

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Author Info

  • Patricia Fraser

    ()

  • Martin Hoesli

    ()

  • Lynn McAlevey

    ()

Abstract

This paper studies actual (real) house prices relative to fundamental (real) house values in New Zealand for the period 1970-2005. We find disparities between actual and fundamental house prices in the early 1970s and 1980s and from 2000 to date. These deviations are found to be substantially more pronounced than for New Zealand stocks. Contrary to the results that have been reported for many other countries, however, there is no evidence of a deviation in the latter part of the 1980s. Finally,we find that the current deviation of house prices from fundamentals is due to price dynamics rather than an overreaction to fundamentals.

(This abstract was borrowed from another version of this item.)

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File URL: http://hdl.handle.net/10.1007/s11146-007-9060-8
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Bibliographic Info

Article provided by Springer in its journal The Journal of Real Estate Finance and Economics.

Volume (Year): 37 (2008)
Issue (Month): 1 (July)
Pages: 71-91

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Handle: RePEc:kap:jrefec:v:37:y:2008:i:1:p:71-91

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Web page: http://www.springerlink.com/link.asp?id=102945

Related research

Keywords: Real house prices; Real disposable income; Fundamentals; Present value; Time-varying risk; Bubbles; New Zealand; G12; R31; G18;

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References

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Citations

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Cited by:
  1. Sarah Drought & Chris McDonald, 2011. "Forecasting house price inflation: a model combination approach," Reserve Bank of New Zealand Discussion Paper Series DP2011/07, Reserve Bank of New Zealand.
  2. Chen, Pei-Fen & Chien, Mei-Se & Lee, Chien-Chiang, 2011. "Dynamic modeling of regional house price diffusion in Taiwan," Journal of Housing Economics, Elsevier, vol. 20(4), pages 315-332.
  3. Mao-wei Hung & Leh-chyan So, 2012. "How Much Extra Premium Does a Loss-averse Owner-occupied Home Buyer Pay for His House?," The Journal of Real Estate Finance and Economics, Springer, vol. 45(3), pages 705-722, October.
  4. Jean-Pierre Andre, 2011. "Economic Imbalances: New Zealand's Structural Challenge," Treasury Working Paper Series 11/03, New Zealand Treasury.

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