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What Drives the Property Price-Trading Volume Correlation? Evidence from a Commercial Real Estate Market

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  • Charles Leung
  • Dandan Feng

Abstract

The significant price-trading volume correlation found in the residential property market presents a challenge to the rational expectation hypothesis. Existing theories account for this fact with either capital market imperfection (down-payment effect or loss-aversion consideration) or imperfect information (search theoretic models). This paper employs data from a commercial real estate market, which face a different degree of severity of capital market constraint than the residential market, and thus provide an indirect but effective test for alternative theories. Policy implications are also discussed. Copyright Springer Science + Business Media, Inc. 2005

Suggested Citation

  • Charles Leung & Dandan Feng, 2005. "What Drives the Property Price-Trading Volume Correlation? Evidence from a Commercial Real Estate Market," The Journal of Real Estate Finance and Economics, Springer, vol. 31(2), pages 241-255, September.
    • Handle: RePEc:kap:jrefec:v:31:y:2005:i:2:p:241-255
    DOI: 10.1007/s11146-005-1374-9
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