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Full-Text Articles in Business
Hedging And Pricing Rent Risk With Search Frictions, Briana Chang, Hyunsoo Choi, Harrison Hong, Jeffrey Kubik
Hedging And Pricing Rent Risk With Search Frictions, Briana Chang, Hyunsoo Choi, Harrison Hong, Jeffrey Kubik
Research Collection Lee Kong Chian School Of Business
The desire of risk-averse households to hedge rent risk is thought to increase home ownership and prices. While evidence for the ownership implication is compelling, support for the price effect is mixed. We show that an important reason is search frictions. Rent risk reduces outside options, leading to less-picky buyers and worse home/buyer matches. This attenuates the rise in the price-to-rent ratio that would otherwise occur without frictions. Consistent with our model, a house remains on the market for fewer days when rent risk is higher. Accounting for frictions significantly increases the effect of rent risk on home prices.
Hedging And Pricing Rent Risk With Search Frictions, Briana Chang, Hyunsoo Choi, Harrison Hong, Jeffrey Kubik
Hedging And Pricing Rent Risk With Search Frictions, Briana Chang, Hyunsoo Choi, Harrison Hong, Jeffrey Kubik
Research Collection Lee Kong Chian School Of Business
The desire of risk-averse households to hedge rent risk is thought to increase home ownership and prices. While evidence for the ownership implication is compelling, support for the price effect is mixed. We show that an important reason is search frictions. Rent risk reduces outside options, leading to less-picky buyers and worse home/buyer matches. This attenuates the rise in the price-to-rent ratio that would otherwise occur without frictions. Consistent with our model, a house remains on the market for fewer days when rent risk is higher. Accounting for frictions significantly increases the effect of rent risk on home prices.
Are House Prices Driven By Capital Flows? Evidence From Singapore, Hwee Kwan Chow, Taojun Xie
Are House Prices Driven By Capital Flows? Evidence From Singapore, Hwee Kwan Chow, Taojun Xie
Research Collection School Of Economics
This paper investigates whether real house price appreciations can be attributed to the surge in real capital inflows into Singapore. We proxy capital flows by using the amount of foreign direct investments (FDI) to real estate capturing the foreign purchases of property in Singapore which we deflate by the private residential property price index. Notwithstanding the absence of a cointegrating relationship, our results support the hypothesis that lagged short term fluctuations in capital inflows are positively associated with the growth rates of house prices over the last decade. We also provide evidence that macroprudential measures implemented by Singapore reduced the …
Further Evidence On The Spatio-Temporal Model Of House Prices In The United States, Badi H. Baltagi, Jing Li
Further Evidence On The Spatio-Temporal Model Of House Prices In The United States, Badi H. Baltagi, Jing Li
Research Collection School Of Economics
Holly, Pesaran, and Yamagata (Journal of Econometrics 2010; 158: 160–173) use a panel of 49 states over the period 1975–2003 to show that state-level real housing prices are driven by economic fundamentals, such as real per capita disposable income, as well as by common shocks, such as changes in interest rates, oil prices and technological change. They apply the common correlated effects estimator of Pesaran (Econometrica 2006; 74(4): 967–101), which takes into account spatial interactions that reflect both geographical proximity and unobserved common factors. This paper replicates their results using a panel of 381 metropolitan statistical areas observed over the …