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Bubble In The Indian Real Estate Markets: Identification Using Regime-Switching Methodology

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  • Vijay Kumar Vishwakarma
  • Ohannes George Paskelian

Abstract

India has a growing economy that can support high-income levels and in turn sustain higher real estate prices. The high prices of Indian real estate seem to be in harmony with its fast growing economy. However, there are concerns about speculative bubble behavior in the Indian real estate market. In this paper, we utilize a sophisticated regime-switching speculative bubble model developed by van Norden and Schaller (1993) along with other traditional econometric methods to test for the presence of bubbles in the Indian real estate market. Our results provide evidence that India real estate bubble was not affected by the 2007-2008 global economic slowdown. The Indian Real Estate market grew from the end of 2008 through early 2011.

Suggested Citation

  • Vijay Kumar Vishwakarma & Ohannes George Paskelian, 2012. "Bubble In The Indian Real Estate Markets: Identification Using Regime-Switching Methodology," The International Journal of Business and Finance Research, The Institute for Business and Finance Research, vol. 6(3), pages 27-40.
    • Handle: RePEc:ibf:ijbfre:v:6:y:2012:i:3:p:27-40
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    References listed on IDEAS

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    More about this item

    Keywords

    Indian Real Estate; Rational speculative bubbles; Regime-switching tests; duration dependence tests; REITs;
    All these keywords.

    JEL classification:

    • C22 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes
    • C41 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Duration Analysis; Optimal Timing Strategies
    • L85 - Industrial Organization - - Industry Studies: Services - - - Real Estate Services
    • R33 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Nonagricultural and Nonresidential Real Estate Markets

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