Leung, A Y T; Xu, J and Ge, J X (2005) Analysis of dynamical impacts of interest rate on expected housing price. In: Khosrowshahi, F (ed.) Proceedings of 21st Annual ARCOM Conference, 7-9 September 2005, London, UK.
Abstract
The first interest rate hike in China during the last decade aiming to cool the seemly overheated real estate market arouses debate on whether financial policy is indeed effective for housing price adjustment. Different real estate markets have different scenarios during a sudden change (shock) of interest rate. A cobweb model is built to analyze the after-shock oscillations. Consideration includes the heterogeneous expectations of agents, supply lag and deprecation rate. In particular, user cost demand model and stock-flow supply model are used. The results show that the dynamics of the expected housing price varies substantially with these factors. Financial policies should be chosen carefully in consistence with each unique real estate market, since some portfolio parameters can increase or suppress the price oscillations.
| Item Type: | Conference Paper (Paper) |
|---|---|
| Uncontrolled Keywords: | cobweb model; expected housing price oscillations; heterogeneous expectations |
| Index terms: | markets, housing, dynamics, real estate, interest rate, agent, China |
| Subjects: | practitioner, Geography, real estate economics, systems engineering, economic analysis, construction type |
| Topics: | Construction Technology, Roles and Professions, Engineering Principles, Urban Studies, Business Strategy, Geographical Context |
| Descriptive scope: | 2 PC |
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