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Housing prices and speculation dynamics: a study of Auckland housing market

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  • Yang Yang
  • Michael Rehm

Abstract

Many housing markets across the globe have experienced upward trends in real estate prices during the past two decades. The dynamics between housing prices and speculation have been analysed by existing housing literature, but this study has a few features that may deepen the understanding of this topic. This research uses transaction-level data, focuses on only investor-purchase records, distinguishes leveraged transactions from unleveraged ones and adopts a new proxy for property speculation. Furthermore, the price elasticity of housing supply has been examined as the price responsiveness is important for understanding the topic in a supply-constrained market. We build a stock adjustment model to estimate the elasticity and a vector error-correction model to conduct Granger causality tests, impulse response analyses and a variance decomposition analysis. The findings uncover a feedback loop in a market with inelastic housing supply: investors’ speculative behaviour lifts Auckland housing prices which in turn spur further housing speculation.

Suggested Citation

  • Yang Yang & Michael Rehm, 2021. "Housing prices and speculation dynamics: a study of Auckland housing market," Journal of Property Research, Taylor & Francis Journals, vol. 38(4), pages 286-304, October.
    • Handle: RePEc:taf:jpropr:v:38:y:2021:i:4:p:286-304
    DOI: 10.1080/09599916.2021.1873405
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    Cited by:

    1. Hanli Chen & Yu Zhang & Ningxin Zhang & Man Zhou & Heping Ding, 2022. "Analysis on the Spatial Effect of Infrastructure Development on the Real Estate Price in the Yangtze River Delta," Sustainability, MDPI, vol. 14(13), pages 1-22, June.
    2. Yousef Mohammadzaheh & Arash Refah-Kahriz, 2023. "Saving structure, housing speculation, and economic growth in the Iranian economy," Journal of Social and Economic Development, Springer;Institute for Social and Economic Change, vol. 25(1), pages 170-195, June.
    3. Yang Yang & Michael Rehm & Mingquan Zhou, 2021. "Housing Price Volatility: What's the Difference between Investment and Owner‐Occupancy?," The Economic Record, The Economic Society of Australia, vol. 97(319), pages 548-563, December.

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