House Market in Chinese Cities : Dynamic Modeling, In-Sample Fitting and Out-ofSample Forecasting

Research output: Journal Publications and ReviewsRGC 21 - Publication in refereed journalpeer-review

8 Scopus Citations
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Detail(s)

Original languageEnglish
Pages (from-to)85-117
Journal / PublicationInternational Real Estate Review
Volume14
Issue number1
Publication statusPublished - 2011

Abstract

This paper attempts to contribute in several ways. Theoretically, it proposes simple models of house price dynamics and construction dynamics, all based on the maximization problems of forward-looking agents, which may carry independent interests. Simplified versions of the model implications are estimated with the data from four major cities in China. Both price and construction dynamics exhibit strong persistence in all cities. Significant heterogeneity across cities is found. Our models out-perform widely used alternatives in in-sample-fitting for all cities, although similar success is only limited to highly developed cities in out-of-sample forecasting. Policy implications and future research directions are also discussed.

Research Area(s)

  • Pre-sale, Production constraint, Collateral constraint, Cross-city heterogeneity, Fundamental versus policy