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Global Liquidity, Capital Inflows and House Prices in ASEAN Economies

Author

Listed:
  • Matthew S. Yiu

    (Hong Kong Monetary Authority and ASEAN+3 Macroeconomic Research Office)

  • Sahminan Sahminan

    (Bank Indonesia and ASEAN+3 Macroeconomic Research Office)

Abstract

The quantitative easing policy adopted by the advanced economies since 2009 has led to an abundance in global liquidity. In the same period, the ASEAN-5 economies (Indonesia, Malaysia, the Philippines, Singapore and Thailand) have recorded strong capital inflows, particularly portfolio inflows. The asset prices, in particular, the house prices of these economies, have also experienced excess buoyancy. In this paper, the relationships among global liquidity, house prices and capital flows are studied. Empirically, capital inflows have a positive effect on the residential house prices of Indonesia, Malaysia, the Philippines and Singapore. After accounting for their own domestic demand (by using real GDP growth as a proxy), the capital inflows still have a positive impact in Indonesia and Singapore. The authorities of these economies have implemented similar macroprudential measures to safeguard financial stability and cool down speculative activities. The effectiveness of the measures is mainly the reduction in the transaction volume.

Suggested Citation

  • Matthew S. Yiu & Sahminan Sahminan, 2017. "Global Liquidity, Capital Inflows and House Prices in ASEAN Economies," International Real Estate Review, Global Social Science Institute, vol. 20(1), pages 105-126.
    • Handle: RePEc:ire:issued:v:20:n:01:2017:p:105-126
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    References listed on IDEAS

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    Cited by:

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    2. Yin-Wong Cheung & Kenneth K. Chow & Matthew S. Yiu, 2017. "Effects of capital flow on the equity and housing markets in Hong Kong," Pacific Economic Review, Wiley Blackwell, vol. 22(3), pages 332-349, August.
    3. Wei Sun & Matthew S. Yiu, 2023. "Financial conditions and the well‐being of the real estate sector—A bottom‐up default analysis on five ASEAN economies," Contemporary Economic Policy, Western Economic Association International, vol. 41(1), pages 41-60, January.
    4. Hwee Kwan Chow & Taojun Xie, 2016. "Are House Prices Driven by Capital Flows? Evidence from Singapore," Journal of International Commerce, Economics and Policy (JICEP), World Scientific Publishing Co. Pte. Ltd., vol. 7(01), pages 1-21, February.
    5. Taghizadeh-Hesary, Farhad & Yoshino, Naoyuki & Chiu, Alvin, 2019. "Internal and External Determinants of Housing Price Booms in Hong Kong, China," ADBI Working Papers 948, Asian Development Bank Institute.
    6. Kneer, Christiane & Raabe, Alexander, 2019. "Tracking foreign capital: the effect of capital inflows on bank lending in the UK," Bank of England working papers 804, Bank of England.

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    More about this item

    Keywords

    Capital Flows; Residential House Price; Macroprudential; ASEAN Economies;
    All these keywords.

    JEL classification:

    • L85 - Industrial Organization - - Industry Studies: Services - - - Real Estate Services

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