House Price Trigger and Infusion Trap

Shanghai University of Finance and Economics
Publication Type:
Conference Proceeding
The 13th Asian Real Estate Society (AsRES) Annual Meeting and International Conference Proceedings, 2008, pp. 60 - 67
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Rapid movements of house prices bring concerns about affordability when house prices go up and of crisis when they fall below their trend value. This paper reviews house prices which have the potential to deviate significant from market fundamentals in the short term, especially when supply is rigid. The paper then establishes a house price trigger model under the assumption of supply rigidity in order to explain fluctuations in house prices. The model is tested by on time series data from Hong Kong and explains that the changes of quantity demand, the level of increase and decrease in the market place, are triggers that induce fluctuations in house prices. The behaviour of developers, investors and consumers in the property market and the housing market of mainland China is also analysed using the concepts developed.
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