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Commodity house prices

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  • Charles Ka Yui Leung
  • Song Shi
  • Edward Tang

Abstract

This paper studies how commodity price movements have affected local house prices in commodity-dependent economies, Australia and New Zealand. We build a geographically hierarchical empirical model and find that commodity prices influence local house prices directly and also indirectly through macroeconomic variables. While commodity price changes function more like ?income shocks? rather than ?cost shocks? in both Australia and New Zealand, regional heterogeneity is also observed in terms of differential dynamic responses of local house prices to energy versus non-energy commodity price movements. The results are robust to alternative approaches. Directions for future research are also discussed.

Suggested Citation

  • Charles Ka Yui Leung & Song Shi & Edward Tang, 2013. "Commodity house prices," Globalization Institute Working Papers 154, Federal Reserve Bank of Dallas.
    • Handle: RePEc:fip:feddgw:154
    Note: Published as: Leung, Charles Ka Yui, Song Shi and Edward Tang (2013), "Commodity House Prices," Regional Science and Urban Economics 43 (6): 875-887.
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    Cited by:

    1. Tang, Edward Chi Ho & Leung, Charles Ka Yui, 2024. "Icing on the cake: Can the Top-Floor Units serve as a status good and an investment simultaneously?," MPRA Paper 121937, University Library of Munich, Germany.
    2. Zheng Zheng Li & Chi-Wei Su, 2023. "How does real estate market react to the iron ore boom in Australian capital cities?," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 71(2), pages 517-537, October.
    3. Wai Hong Kan Tsui & David Tat Wei Tan & Song Shi, 2017. "Impacts of airport traffic volumes on house prices of New Zealand’s major regions: A panel data approach," Urban Studies, Urban Studies Journal Limited, vol. 54(12), pages 2800-2817, September.
    4. Leung, Charles Ka Yui & Shi, Song & Ho Tang, Edward Chi, 2013. "Commodity house prices," Regional Science and Urban Economics, Elsevier, vol. 43(6), pages 875-887.
    5. Zhou, Zhengyi, 2016. "Overreaction to policy changes in the housing market: Evidence from Shanghai," Regional Science and Urban Economics, Elsevier, vol. 58(C), pages 26-41.
    6. Dong Chen & Yanmin Gao & Mayank Kaul & Charles Ka Yui Leung & Desmond Tsang, 2016. "The Role of Sponsors and External Management on the Capital Structure of Asian-Pacific REITs: The Case of Australia, Japan, and Singapore," International Real Estate Review, Global Social Science Institute, vol. 19(2), pages 197-221.
    7. Tsui, Kan Wai Hong & Tan, David & Chow, Clement Kong Wing & Shi, Song, 2019. "Regional airline capacity, tourism demand and housing prices: A case study of New Zealand," Transport Policy, Elsevier, vol. 77(C), pages 8-22.
    8. 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.
    9. Shi, Song & Yang, Zan & Tripe, David & Zhang, Huan, 2015. "Uncertainty and new apartment price setting: A real options approach," Pacific-Basin Finance Journal, Elsevier, vol. 35(PB), pages 574-591.
    10. Stenvall, David & Hedström, Axel & Yoshino, Naoyuki & Uddin, Gazi Salah & Taghizadeh-Hesary, Farhad, 2022. "Nonlinear tail dependence between the housing and energy markets," Energy Economics, Elsevier, vol. 106(C).
    11. Valadkhani, Abbas & Costello, Greg & Ratti, Ronald, 2016. "House price cycles in Australia’s four largest capital cities," Economic Analysis and Policy, Elsevier, vol. 52(C), pages 11-22.
    12. Agnello, Luca & Castro, Vitor & Hammoudeh, Shawkat & Sousa, Ricardo M., 2017. "Spillovers from the oil sector to the housing market cycle," Energy Economics, Elsevier, vol. 61(C), pages 209-220.
    13. Shi, Song & Jou, Jyh-Bang & Tripe, David, 2014. "Can interest rates really control house prices? Effectiveness and implications for macroprudential policy," Journal of Banking & Finance, Elsevier, vol. 47(C), pages 15-28.

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    JEL classification:

    • F40 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - General
    • G10 - Financial Economics - - General Financial Markets - - - General (includes Measurement and Data)
    • R30 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - General

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