The residential market of Hong Kong: rational or irrational?

Xiao, Qin; Liu, Yunhua

Abstract

The current study attempts to investigate the proposition that Hong Kong residential market is only driven by a rational speculative bubble, in addition to fundamentals. The fundamentals are chosen according to the present value model, but will account for latent private information. Potential roles of other public information are also explored. The study finds that the influence of the rational bubble on the price growth is highly significant. However, in contrast to Seoul and Singapore housing market (Xiao, 2006; Xiao and Huang, 2007), neither the fundamentals, nor the rational bubble can explain much of the price growth in the market of concern. This finding leaves large room for questioning whether or not this market is more prone to irrationality than its counterparts in Seoul and Singapore. © 2010 Taylor & Francis.

Citation

Xiao, Q., & Liu, Y. (2010). The residential market of Hong Kong: rational or irrational?. Applied economics, 42(7), 923-933. https://doi.org/10.1080/00036840701720960

• Journal Article Type: Article
• Acceptance Date: Jan 1, 2010
• Publication Date: Mar 1, 2010
• Print ISSN: 0003-6846
• Electronic ISSN: 1466-4283
• Publisher: Routledge
• Peer Reviewed: Peer Reviewed
• Volume: 42
• Issue: 7
• Article Number: PII 901881433
• Pages: 923-933
• DOI: https://doi.org/10.1080/00036840701720960
• Keywords: Economics and Econometrics
• Public URL: https://hull-repository.worktribe.com/output/424014