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Global Liquidity, Capital Inflows and House Prices in ASEAN Economies

Author

Listed:
  • Matthew S. Yiu

    (Hong Kong Monetary Authority and ASEAN+3 Macroeconomic Research Office)

  • Sahminan Sahminan

    (Bank Indonesia and ASEAN+3 Macroeconomic Research Office)

Abstract

Quantitative Easing (QE) policies, adopted by the advanced economies since 2009, have led to abundant global liquidity. In the same period, the ASEAN-5 economies (Indonesia, Malaysia, the Philippines, Singapore and Thailand) have recorded strong capital inflows, particularly portfolio inflows. Asset prices, in particular house prices in these economies, have also experienced excess buoyancy. This paper studies the relationship between global liquidity, house prices and capital flows. Empirically, capital inflows have had a positive effect on residential house prices in Indonesia, Malaysia, the Philippines and Singapore. After accounting for domestic demand (using real GDP growth as a proxy), capital inflows have still had a positive impact in Indonesia and Singapore. The authorities of these economies have implemented similar macroprudential measures to safeguard financial stability and reduce speculative activity. The effectiveness of the measures has been seen mainly through a reduction in housing transactions.

Suggested Citation

  • Matthew S. Yiu & Sahminan Sahminan, 2015. "Global Liquidity, Capital Inflows and House Prices in ASEAN Economies," Working Papers 142015, Hong Kong Institute for Monetary Research.
    • Handle: RePEc:hkm:wpaper:142015
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    References listed on IDEAS

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    Cited by:

    1. Mahjus Ekananda & Tulus Suryanto, 2021. "The Influence of Global Financial Liquidity on the Indonesian Economy: Dynamic Analysis with Threshold VAR," Economies, MDPI, vol. 9(4), pages 1-20, October.
    2. Yin-Wong Cheung & Kenneth K. Chow & Matthew S. Yiu, 2017. "Effects of capital flow on the equity and housing markets in Hong Kong," Pacific Economic Review, Wiley Blackwell, vol. 22(3), pages 332-349, August.
    3. Wei Sun & Matthew S. Yiu, 2023. "Financial conditions and the well‐being of the real estate sector—A bottom‐up default analysis on five ASEAN economies," Contemporary Economic Policy, Western Economic Association International, vol. 41(1), pages 41-60, January.
    4. Hwee Kwan Chow & Taojun Xie, 2016. "Are House Prices Driven by Capital Flows? Evidence from Singapore," Journal of International Commerce, Economics and Policy (JICEP), World Scientific Publishing Co. Pte. Ltd., vol. 7(01), pages 1-21, February.
    5. Alexander Raabe & Christiane Kneer, 2019. "Tracking Foreign Capital: The Effect of Capital Inflows on Bank Lending in the UK," IHEID Working Papers 10-2019, Economics Section, The Graduate Institute of International Studies.
    6. Taghizadeh-Hesary, Farhad & Yoshino, Naoyuki & Chiu, Alvin, 2019. "Internal and External Determinants of Housing Price Booms in Hong Kong, China," ADBI Working Papers 948, Asian Development Bank Institute.

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    More about this item

    Keywords

    Capital Flows; Residential House Price; Macroprudential; ASEAN Economies;
    All these keywords.

    JEL classification:

    • E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy
    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation
    • R31 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Housing Supply and Markets

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