Price discovery of property markets in Shenzhen and Hong Kong

Chi Man Hui, Ivan Ng

Research output: Journal article publicationJournal articleAcademic researchpeer-review

9 Citations (Scopus)

Abstract

Hong Kong and Shenzhen, while being interrelated in many aspects, have encountered different types of demand shocks throughout the past decade. This is likely due to disparities in market conditions and degrees of government regulations. In the light of such differences in property price trends, this research first investigates the relationships between housing prices and market fundamentals for both cities; and then it explores whether a housing price bubble existed for them in 2006. The results indicate that housing prices seem to have interacted abnormally with market fundamentals in recent years, especially for Shenzhen. In addition, while Shenzhen's housing prices are mainly explained by previous housing prices and personal income, most economic indicators explain Hong Kong's housing prices well. With regard to price bubbles, a puny bubble which amounts to as much as 4.5% of the housing price was formed in Shenzhen in 2006. In the meantime, the housing price bubble for Hong Kong had been diminished. Though currently not at dangerous levels, housing price bubbles should be taken with caution especially in today's China, characterized by overinvestment and rapid policy changes.
Original languageEnglish
Pages (from-to)1175-1196
Number of pages22
JournalConstruction Management and Economics
Volume27
Issue number12
DOIs
Publication statusPublished - 1 Dec 2009

Keywords

  • Generalized impulse response
  • Granger causality
  • Price
  • Property market
  • Variance decomposition

ASJC Scopus subject areas

  • Management Information Systems
  • Building and Construction
  • Industrial and Manufacturing Engineering

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