The present paper develops an econometric model of the real estate cycle, focused on the analysis of the residential market in Spain, and aims to predict the future evolution of the average and ...fundamental prices of the housing industry. Unlike traditional models, the Econometric Model developed incorporates not only an extrinsic and intrinsic approach, but also analytical assumptions and criteria inherited from the Behavioral School. Contrasting the Modern Financial School theory, the Behavioral Finance School assumes the presence of irrational investors in the market. Thereby irrational decisions substantially influence, in a persistent way, whether underestimating or overestimating, the evolution of asset prices. This irrational influence is the fundamental basis of both expansive and depressive phases that shape the real estate cycle.
The present paper develops an econometric model of the real estate cycle, focused on the analysis of the residential market in Spain, and aims to predict the future evolution of the average and ...fundamental prices of the housing industry. Unlike traditional models, the Econometric Model developed incorporates not only an extrinsic and intrinsic approach, but also analytical assumptions and criteria inherited from the Behavioral School.Contrasting the Modern Financial School theory, the Behavioral Finance School assumes the presence of irrational investors in the market. Thereby irrational decisions substantially influence, in a persistent way, whether underestimating or overestimating, the evolution of asset prices. This irrational influence is the fundamental basis of both expansive and depressive phases that shape the real estate cycle.
El presente documento desarrolla un modelo econométrico del ciclo inmobiliario, concretamente del mercado residencial, con la finalidad de prever la evolución futura de los precios del sector. A diferencia de otros modelos, nuestra propuesta incorpora, no sólo un acercamiento que combina el enfoque extrínseco e intrínseco, si no también hipótesis y criterios de la Escuela Conductual.En contraste con la escuela financiera moderna, las finanzas conductuales asumen la presencia de inversores irracionales en el mercado, que influyen en los precios infravalorándolos o sobrevalorándolos de forma persistente y duradera, factor que constituye la base de las fases expansivas y depresivas que desarrollan el ciclo inmobiliario.
The study presents an analysis of the causes which have contributed to the decline in real estate. There will be an analysis of housing market price dynamics of the apartments, with specific ...reference to the housing market in Tg Mures, at the begining of the crisis compared with the current prices.
This paper estimates the real estate cycle in Thailand. From the estimated results, we find that duration of the expansion period in the real estate cycle in Thailand was approximately 25.25 months ...while the contraction period lasted much longer (44.00 months). The duration of the trough-to-trough cycle is estimated to be approximately 69.25 months. The significant leading indicators for the real estate cycle are construction price index, money supply (M2), property stock index and post-credit finance. Compared to Thailand's economic cycle, the real estate cycle leads the trough and the peak in the business/economic cycle by approximately 14.3 months and 20.3 months respectively. In expansion periods, the real estate cycle is always found to lead the business/economic cycle. However, it is not clear that in contraction periods the real estate cycle leads the business cycle. This finding differs from that of previous studies. We found that real estate crises led to economic crises in the early 1980s and in 1997, while in other contraction periods it was an economic recession that led to a contraction in the real estate sector.
The real estate cycle and financial stability are closely correlated. In light of global real estate bubbles, China's real estate cycle has attracted wide attention since 1998. The present paper ...analyzes three driving factors in the context of the current real estate cycle; namely, economic growth, macroeconomic environment and institutional establishment. Supported by econometric analysis using quarterly data from 1992–2004, the present paper indicates that real estate will develop steadily and that housing prices will consistently rise in the relative long run. Based on quantitative analysis, it is concluded that the implications of the current real estate cycle for financial stability include risks of real estate credit exposure, government guarantees and maturity mismatch. Some corresponding policy implications are discussed, such as advancing banking reform, encouraging the rational behavior of local governments and strengthening the regulation of foreign capital flows in and out of China's real estate industry.
(Edited by Xinyu Fan)
This chapter lays out the problem of overbuilding and its causes. It introduces debates about the magnitude and pace of physical change in cities: just how flexible or obdurate are they, and what ...factors drive their transformation? The dominant paradigm in urban economics describes building booms as cyclical and explains new construction primarily in terms of its demand by space users. Why, then, is real estate development prone to bursts of hyperactivity and dormancy, the motivations for which appear divorced from the business cycle? Integrating critical urban theory and economic sociology, the chapter lays out a novel framework for understanding construction booms and bubbles. New financial instruments channel capital to the built environment helped along by professional actors that help construct both occupant and investor demand for new buildings. In contrast to both supply- and demand-side perspectives, however, the approach adopted in the book is robustly agent-centered and draws from emerging theories of the performativity of markets. The professionals responsible for making investment decisions are identified as are the institutional incentives that encourage them to position new construction above renovated older buildings.
Since the housing system reform took place in cities and towns, China’s real estate market has become mature gradually. Real estate loan business has become a core task for commercial banks. This ...article is based on the relation between Chinese real estate market development cycle and Chinese banking to analyses the influence real estate cycle has on the profitability level of Chinese banking and capital adequacy ratio, and proposes appropriate measures that commercial banks should take for further real estate credit business.
The present paper develops an econometric model of the real estate cycle, focused on the analysis of the residential market in Spain, and aims to predict the future evolution of the average and ...fundamental prices of the housing industry. Unlike traditional models, the Econometric Model developed incorporates not only an extrinsic and intrinsic approach, but also analytical assumptions and criteria inherited from the Behavioral School. Contrasting the Modern Financial School theory, the Behavioral Finance School assumes the presence of irrational investors in the market. Thereby irrational decisions substantially influence, in a persistent way, whether underestimating or overestimating, the evolution of asset prices. This irrational influence is the fundamental basis of both expansive and depressive phases that shape the real estate cycle.
Peer Reviewed
This paper applies the Hodrck-Prescott (HP) filter to forecast short-term residential real estate prices under cyclical movements. We separate the trend component from the cyclical component. We show ...that each regional residential market reacts not only to previous price movements, but also that these regional markets react to previous shocks under Auto Regressive Integrated Moving Average (ARIMA) modeling. Using the S&P Case-Shiller Home Price Index, we compare our forecast to index values from the Chicago Mercantile Exchange (CME) Housing Futures and Options. Our study identifies possible systematic errors from the different price adjustments reflecting current market situations.
