IDEAS home Printed from https://ideas.repec.org/a/spr/eaiere/v14y2017i1d10.1007_s40844-017-0072-7.html
   My bibliography  Save this article

Property bubble in Hong Kong: A predicted decade-long slump (2016–2025)

Author

Listed:
  • Peter Richmond

    (Trinity College)

  • Bertrand M. Roehner

    (University Pierre and Marie Curie)

Abstract

Between 2003 and 2015 the prices of apartments in Hong Kong (adjusted for inflation) were multiplied by a factor of 3.8. This is more than in the United States prior to the so-called subprime crisis of 2007. The analysis of this speculative episode confirms the mechanism and regularities already highlighted by the present authors in similar episodes that occurred previously in other countries. Based on these regularities, it is possible to predict the price trajectory over the time interval 2016–2025. It suggests that, unless appropriate relief is provided by the mainland, Hong Kong will experience a decade-long slump. This bubble took considerable proportions largely because the currency board system through which Hong Kong interest rates are modeled on US rates made it impossible to “cool the market”. In fact, it resulted in loans with negative real interest rates.

Suggested Citation

  • Peter Richmond & Bertrand M. Roehner, 2017. "Property bubble in Hong Kong: A predicted decade-long slump (2016–2025)," Evolutionary and Institutional Economics Review, Springer, vol. 14(1), pages 79-99, June.
    • Handle: RePEc:spr:eaiere:v:14:y:2017:i:1:d:10.1007_s40844-017-0072-7
    DOI: 10.1007/s40844-017-0072-7
    as

    Download full text from publisher

    File URL: http://link.springer.com/10.1007/s40844-017-0072-7
    File Function: Abstract
    Download Restriction: Access to the full text of the articles in this series is restricted.
    File URL: https://libkey.io/10.1007/s40844-017-0072-7?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Sergei Maslov & Bertrand M. Roehner, 2003. "Does The Price Multiplier Effect Also Hold For Stocks?," International Journal of Modern Physics C (IJMPC), World Scientific Publishing Co. Pte. Ltd., vol. 14(10), pages 1439-1451.
    2. Roehner,Bertrand M., 2002. "Patterns of Speculation," Cambridge Books, Cambridge University Press, number 9780521802635.
    3. Bertrand M. Roehner, 2009. "Hidden Collective Factors in Speculative Trading," Springer Books, Springer, number 978-3-642-03048-2, February.
    4. Richmond, Peter, 2007. "A roof over your head; house price peaks in the UK and Ireland," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 375(1), pages 281-287.
    5. Muhammad Al-Jasser & Muhammad Ahmed Banafe, 2005. "Foreign exchange intervention in Saudi Arabia," BIS Papers chapters, in: Bank for International Settlements (ed.), Foreign exchange market intervention in emerging markets: motives, techniques and implications, volume 24, pages 265-72, Bank for International Settlements.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Peter Richmond & Bertrand M. Roehner, 2016. "Property bubble in Hong Kong: A predicted decade-long slump (2016-2025)," Papers 1608.03985, arXiv.org.
    2. Slanina, Frantisek, 2013. "Essentials of Econophysics Modelling," OUP Catalogue, Oxford University Press, number 9780199299683.
    3. Marcelo M. de Oliveira & Alexandre C. L. Almeida, 2014. "Testing for rational speculative bubbles in the Brazilian residential real-estate market," Papers 1401.7615, arXiv.org.
    4. Bertrand M. Roehner, 2010. "Fifteen years of econophysics: worries, hopes and prospects," Papers 1004.3229, arXiv.org.
    5. Geoffrey Poitras & John Heaney, 2015. "Classical Ergodicity and Modern Portfolio Theory," Post-Print hal-03680380, HAL.
    6. Bertrand M. Roehner, 2004. "Stock markets are not what we think they are: the key roles of cross-ownership and corporate treasury stock," Papers cond-mat/0406704, arXiv.org.
    7. B. M. Roehner & D. Sornette & J. V. Andersen, 2004. "Response Functions To Critical Shocks In Social Sciences: An Empirical And Numerical Study," International Journal of Modern Physics C (IJMPC), World Scientific Publishing Co. Pte. Ltd., vol. 15(06), pages 809-834.
    8. H. F. Coronel-Brizio & A. R. Hernandez-Montoya, 2003. "Asymptotic behavior of the Daily Increment Distribution of the IPC, the Mexican Stock Market Index," Papers cond-mat/0312413, arXiv.org, revised Oct 2004.
    9. N. J. Moura & M. B. Ribeiro, 2009. "Evidence for the Gompertz curve in the income distribution of Brazil 1978–2005," The European Physical Journal B: Condensed Matter and Complex Systems, Springer;EDP Sciences, vol. 67(1), pages 101-120, January.
    10. Florin Turcaș & Florin Cornel Dumiter & Marius Boiță, 2022. "Econophysics Techniques and Their Applications on the Stock Market," Mathematics, MDPI, vol. 10(6), pages 1-25, March.
    11. Anirban Chakraborti & Ioane Muni Toke & Marco Patriarca & Frederic Abergel, 2011. "Econophysics review: I. Empirical facts," Quantitative Finance, Taylor & Francis Journals, vol. 11(7), pages 991-1012.
    12. Poitras, Geoffrey, 2018. "The pre-history of econophysics and the history of economics: Boltzmann versus the marginalists," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 507(C), pages 89-98.
    13. Marcin Wk{a}torek & Stanis{l}aw Dro.zd.z & Jaros{l}aw Kwapie'n & Ludovico Minati & Pawe{l} O'swik{e}cimka & Marek Stanuszek, 2020. "Multiscale characteristics of the emerging global cryptocurrency market," Papers 2010.15403, arXiv.org, revised Mar 2021.
    14. Herrmann-Pillath, Carsten, 2008. "Neuroeconomics, naturalism and language," Frankfurt School - Working Paper Series 108, Frankfurt School of Finance and Management.
    15. Haven, Emmanuel & Sozzo, Sandro, 2016. "A generalized probability framework to model economic agents' decisions under uncertainty," International Review of Financial Analysis, Elsevier, vol. 47(C), pages 297-303.
    16. Stanley, H.E. & Gabaix, Xavier & Gopikrishnan, Parameswaran & Plerou, Vasiliki, 2007. "Economic fluctuations and statistical physics: Quantifying extremely rare and less rare events in finance," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 382(1), pages 286-301.
    17. Marzena Kozłowska & Andrzej Kasprzak & Ryszard Kutner, 2008. "Fractional Market Model And Its Verification On The Warsaw Stock Exchange," International Journal of Modern Physics C (IJMPC), World Scientific Publishing Co. Pte. Ltd., vol. 19(03), pages 453-469.
    18. Yan, C. & Zhang, J.W. & Zhang, Y. & Tang, Y.N., 2005. "Power–law properties of Chinese stock market," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 353(C), pages 425-432.
    19. Baaquie, Belal Ehsan & Roehner, Bertrand M. & Wang, Qing-hai, 2017. "The wage transition in developed countries and its implications for China," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 470(C), pages 197-216.
    20. Maslov, Sergei & Roehner, Bertrand M, 2004. "The conundrum of stock versus bond prices," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 335(1), pages 164-182.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:spr:eaiere:v:14:y:2017:i:1:d:10.1007_s40844-017-0072-7. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.springer.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.