The residential market of Hong Kong: rational or irrational?

Qin Xiao, Yunhua Liu

    Research output: Contribution to journalArticle

    7 Citations (Scopus)

    Abstract

    The current study attempts to investigate the proposition that Hong Kong
    residential market is only driven by a rational speculative bubble, in addition to fundamentals. The fundamentals are chosen according to the present value model, but will account for latent private information. Potential roles of other public information are also explored. The study finds that the influence of the rational bubble on the price growth is highly significant. However, in contrast to Seoul and Singapore housing market (Xiao, 2006; Xiao and Huang, 2007), neither the fundamentals, nor the rational bubble can explain much of the price growth in the market of concern. This finding leaves large room for questioning whether or not this
    market is more prone to irrationality than its counterparts in Seoul and Singapore.
    Original languageEnglish
    Pages (from-to)923–933
    Number of pages11
    JournalApplied Economics
    Volume42
    Issue number7
    Early online date31 Oct 2007
    DOIs
    Publication statusPublished - 2010

    Keywords

    • speculative bubble
    • rational
    • irrational
    • latent information

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