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Real Estate and the Asian Crisis


  • Quigley, John M.


This paper suggests that activities in the real estate markets in Southeast and East Asian economies were an important contributing force to the financial crises of 1997 in the Asian economies. The analysis relies upon unpublished data reported contemporaneously by financial institutions and market watchers to document the extent of the imbalances in the real property market that were evident to informed observers at the time of the financial collapse. The analysis argues that a series of reforms in the regulation of the property market and the treatment of real property loans by financial institutions are necessary to prevent the recurrence of the kind of speculative bubble that contributed to the financial crises in Asia. Given the recentness of the crisis, the nature of the data, and the absence of definitive statistical sources, the results are tentative, but they are certainly consistent with a financial collapse whose proximate cause was unchecked activity in the property market.

Suggested Citation

  • Quigley, John M., 2002. "Real Estate and the Asian Crisis," Berkeley Program on Housing and Urban Policy, Working Paper Series qt4f4951b0, Berkeley Program on Housing and Urban Policy.
  • Handle: RePEc:cdl:bphupl:qt4f4951b0

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    References listed on IDEAS

    1. John M. Quigley, 1999. "Real Estate Prices and Economic Cycles," International Real Estate Review, Asian Real Estate Society, vol. 2(1), pages 1-20.
    2. Hali J. Edison & Pongsak Luangaram & Marcus Miller, 1998. "Asset bubbles, domino effects and 'lifeboats': elements of the East Asian crisis," International Finance Discussion Papers 606, Board of Governors of the Federal Reserve System (U.S.).
    3. Garber, Peter M, 1990. "Famous First Bubbles," Journal of Economic Perspectives, American Economic Association, vol. 4(2), pages 35-54, Spring.
    4. Mankiw, N. Gregory & Weil, David N., 1989. "The baby boom, the baby bust, and the housing market," Regional Science and Urban Economics, Elsevier, vol. 19(2), pages 235-258, May.
    5. Meese Richard & Wallace Nancy, 1994. "Testing the Present Value Relation for Housing Prices: Should I Leave My House in San Francisco?," Journal of Urban Economics, Elsevier, vol. 35(3), pages 245-266, May.
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    Cited by:

    1. Koh, Winston T.H. & Mariano, Roberto S. & Pavlov, Andrey & Phang, Sock Yong & Tan, Augustine H.H. & Wachter, Susan M., 2005. "Bank lending and real estate in Asia: market optimism and asset bubbles," Journal of Asian Economics, Elsevier, vol. 15(6), pages 1103-1118, January.
    2. Rupert Nabarro & Tony Key, 2005. "Performance measurement and real estate lending risk," BIS Papers chapters,in: Bank for International Settlements (ed.), Real estate indicators and financial stability, volume 21, pages 70-90 Bank for International Settlements.
    3. Renee Fry & Vance L. Martin & Chrismin Tang, 2008. "A New Class Of Tests Of Contagion With Applications To Real Estate Markets," CAMA Working Papers 2008-01, Centre for Applied Macroeconomic Analysis, Crawford School of Public Policy, The Australian National University.
    4. Glaeser, Edward L., 2014. "Understanding housing: The intellectual legacy of John Quigley," Regional Science and Urban Economics, Elsevier, vol. 47(C), pages 3-12.
    5. Charles Ka Yui Leung & Patrick Wai Yin Cheung & Edward Chi Ho Tang, 2013. "Financial Crisis and the Co-movements of Housing Sub-markets: Do relationships change after a crisis?," International Real Estate Review, Asian Real Estate Society, vol. 16(1), pages 68-118.
    6. repec:bth:wpaper:2004-02 is not listed on IDEAS
    7. Aizenman, Joshua & Jinjarak, Yothin, 2009. "Current account patterns and national real estate markets," Journal of Urban Economics, Elsevier, vol. 66(2), pages 75-89, September.
    8. Zhang, Tongbin & Hu, Bo, 2011. "House-Price Crash and Macroeconomic Crisis: A Hong Kong Case Study," MPRA Paper 34962, University Library of Munich, Germany.
    9. Seow Ong & Tien Sing & Alan Teo, 2007. "Delinquency and Default in Arms: The Effects of Protected Equity and Loss Aversion," The Journal of Real Estate Finance and Economics, Springer, vol. 35(3), pages 253-280, October.
    10. Hao Meng & Wen-Jie Xie & Zhi-Qiang Jiang & Boris Podobnik & Wei-Xing Zhou & H. Eugene Stanley, 2013. "Systemic risk and spatiotemporal dynamics of the US housing market," Papers 1306.2831,
    11. Buckley, Robert M. & Kalarickal, Jerry, 2004. "Shelter strategies for the urban poor : idiosyncratic and successful, but hardly mysterious," Policy Research Working Paper Series 3427, The World Bank.
    12. Green, David Jay, 2004. "Investment behavior and the Economic Crisis in Indonesia," Journal of Asian Economics, Elsevier, vol. 15(2), pages 287-303, April.
    13. Obstfeld, Maurice & Rogoff, Kenneth, 2009. "Global imbalances and the financial crisis: products of common causes," Proceedings, Federal Reserve Bank of San Francisco, issue Oct, pages 131-172.
    14. Lipsky, John, 2009. "Asia, the financial crisis, and global economic governance - closing remarks," Proceedings, Federal Reserve Bank of San Francisco, issue Oct, pages 347-353.
    15. Ramon Huerta & Fernando Corbacho & Luis F. Lago-Fernandez, 2008. "A housing-demographic multi-layered nonlinear model to test regulation strategies," Papers 0809.0979,
    16. Martin Hoesli & Kustrim Reka, 2015. "Contagion Channels between Real Estate and Financial Markets," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 43(1), pages 101-138, March.
    17. Edward L. Glaeser, 2016. "Real Estate Bubbles and Urban Development," NBER Working Papers 22997, National Bureau of Economic Research, Inc.
    18. Zhang, Hewitt & Hu, Yannan & Hu, Bo, 2012. "House-price crash and macroeconomic crisis: a Hong Kong case study," MPRA Paper 35534, University Library of Munich, Germany.
    19. Hui, Eddie C.M. & Chen, Jia, 2012. "Investigating the change of causality in emerging property markets during the financial tsunami," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 391(15), pages 3951-3962.
    20. Wen-Chieh Wu & Chin-Oh Chang & Zekiye Selvili, 2003. "Banking System, Real Estate Markets, and Nonperforming Loans," International Real Estate Review, Asian Real Estate Society, vol. 6(1), pages 43-62.


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