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Fundamental or speculative factors in the housing markets of emerging economies? Some lessons from China

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  • Hrushikesh Mallick
  • Mantu Kumar Mahalik

Abstract

Using quarterly data, 1999:Q2--2009:Q3, we empirically examine the key macro determinants of housing prices for China’s residential market. Employing Granger causality and Vector Auto-Regression (VAR) models, we find that there exists strong bivariate causality between house price increases and its determinants. The variance decomposition suggests that speculative factors reflected by past increases in real house price contribute a relatively larger proportion to house price rises relative to fundamental factors.

Suggested Citation

  • Hrushikesh Mallick & Mantu Kumar Mahalik, 2012. "Fundamental or speculative factors in the housing markets of emerging economies? Some lessons from China," Journal of Economic Policy Reform, Taylor & Francis Journals, vol. 15(1), pages 57-67, March.
  • Handle: RePEc:taf:jpolrf:v:15:y:2012:i:1:p:57-67
    DOI: 10.1080/17487870.2011.642580
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    References listed on IDEAS

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    1. Balázs Égert & Dubravko Mihaljek, 2007. "Determinants of House Prices in Central and Eastern Europe," Comparative Economic Studies, Palgrave Macmillan;Association for Comparative Economic Studies, vol. 49(3), pages 367-388, September.
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    Cited by:

    1. Mantu Kumar Mahalik & Hrushikesh Mallick, 2016. "Are house prices guided by fundamentals or speculative factors? An empirical inquiry for India," International Journal of Economic Policy in Emerging Economies, Inderscience Enterprises Ltd, vol. 9(1), pages 47-64.

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