U.K. House Prices: Bubbles or Market Efficiency? Evidence from Regional Analysis

Wu, Yi; Lux, Nicole

doi:10.3390/jrfm11030054

Cited by 8 publications

(6 citation statements)

References 36 publications

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“…Before the policy of allowing foreigners to acquire houses in Turkey commenced, the houses were not as expensive as they are now. Furthermore, in the UK, France, Canada and many other developed countries (Wu and Lux, 2018; Dufitinema, 2022), over 1,400 epidemics occurred, obstructing business activities (Chowdhury et al , 2020). The limitation of this study is its short duration, which is due to data constraints and beyond the control of researchers.…”

Section: Discussionmentioning

confidence: 99%

Interdependence between foreigner housing acquisitions and housing price increase in Turkey during the COVID-19 pandemic era

Salami

Tanrıvermiş

Aliefendioğlu

2023

IJHMA

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Purpose This study aims to establish the relationship between house acquisitions by foreigners (HAF) and house price index (HPI) in Turkey. Design/methodology/approach Due to the nature of this study, the data spans from January 2020 to March 2022. The house price index and the number of foreign house acquisitions across three provinces: Ankara, Izmir and Bursa, and national-level data were obtained from the TurkStat database. Consumer price index (CPI) and Turkish interest rates are control variables. In addition, monthly Turkish interest rates and CPI were obtained from the investing.com and TurkStat database, respectively. Furthermore, this study used autoregressive-distributed lag and Toda Yamamoto Granger causality models to avoid analysis bias. HPI and HAF are the variables used to accomplish the objectives of this study. Findings This study established a short-run equilibrium between foreign house acquisitions at the provincial and national levels. The short-run deviations were adjusted faster, ranging from 57.53% to 89.24% for some provinces, while Izmir is struggling to adjust at 6.48%. Both unidirectional and bidirectional Granger causality evidence suggests that the Turkish house price index increases at the national and provincial levels. This finding suggests the need for continuous policy intervention in the Turkish housing market because house prices play a pivotal role in Turkish economic development and daily lives. Research limitations/implications This study’s scope and single-country study are its limitations. However, those limitations make the findings appropriate for the country of the study rather than generalising the results. Practical implications The study provides empirical evidence that foreign housing acquisition contributes negatively to housing affordability in Turkey and calls for authority intervention. This is because housing is considered shelter, a fundamental need to which citizens are expected to be entitled. Most citizens are low- and medium-income earners who may be unable to afford a house out of their income if it becomes costly. Once the expenditure to secure housing exceeds 30% of their income, it is considered unaffordable. Originality/value To the authors' best knowledge, this is the first empirical study that established the influence of foreign house acquisitions on Turkish house price increases and adversely reduced house affordability by Turkish citizens. The study is the first on foreign Turkish housing acquisition that used both theory of ownership and justice motivation theory to explain HAF.

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Section: Discussionmentioning

confidence: 99%

Interdependence between foreigner housing acquisitions and housing price increase in Turkey during the COVID-19 pandemic era

Salami

Tanrıvermiş

Aliefendioğlu

2023

IJHMA

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“…and that although the mortgage effect has a positive effect on the financing ability of enterprises, it only exists in the short term and is not sustainable". Wu and Lux (2018) analyzed U. K. regional real estate prices from 2005 to 2017 to identify factors influencing house prices (regional versus national) and potential price bubbles. They used the Gordon dividend discount model and they considered house prices as the present value of imputed rents.…”

Section: Theoretical and Methodological Basis Of Mortgage Market Researchmentioning

confidence: 99%

Twenty Years of Mortgage Banking in Slovakia

Horvátová

2020

IJFS

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Mortgage banking began to develop in Slovakia after 1998 as an ambitious project, the goal of which was to elevate the lagging development of the real estate market, the development of the financial market and the creation of banks’ long-term resources. Our goal is a comprehensive assessment of the development of Slovak mortgage banking for the past 20 years from the perspectives of the development of banking, the mortgage bond market, the real estate market and selected interactions between individual elements of the mortgage system. The specific aim of the study is to evaluate the substantial links between the basic economic indicators, indicators of housing finance and real estate prices in Slovakia. To evaluate these issues VAR (Vector Autoregression) models, models of panel and linear regression and DEA (Data Envelopment Analysis) models were used. Slovakia has specific indicators of the development of mortgage banking, adequate to its historical and economic development. It was confirmed that the availability of real estate loans had a significant impact on the increase in real estate prices. Real estate prices in Bratislava have different development factors than real estate prices from a nationwide perspective. Low interest rates have an important role in housing financing. The second part of the study is oriented towards an evaluation of the technical efficiency of individual banks. The results of DEA point out that the largest banks in Slovakia were the most efficient in the pre-crisis year 2007. The overall results show that policymakers should react not only to the household indebtedness rate and risks for individual clients, but should also see the risks for banks in possible changes in the real estate market, or the risks of changes in interest rates in the future.

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“…This is then followed by the sudden drop in property values. Other than the sudden movement of property prices, Wu and Lux (2018) have categorized bubbles as the difference between the expected growth in house prices based on previous findings and the actual price growth. Lastly, speculation that was led by property speculators was one of the main causes of the housing boom and bubble (Glaeser, 2016;Shi, 2016;Majid et al, 2017).…”

Section: Housing Bubblesmentioning

confidence: 99%

Prospecting Housing Bubbles in Malaysia

Hamid

Razali

Azmi

et al. 2022

Real Estate Management and Valuation

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There have been extensive studies pertaining on bubble detection in literature, though very few investigate the Malaysian residential property market. The inflated housing market, however, has sparked widespread public anxiety and there has been a proliferation of comments and forecasts about the presence of housing bubbles in Malaysia throughout the last decade. The purpose of this paper is to assess the housing bubbles in Malaysia by using empirical models in detecting Malaysian residential property bubbles. This research employed the Markov Switching (MS) model to investigate the housing bubbles for the Malaysian residential property market. The findings revealed Malaysian housing prices to be relatively stable over the period 2010 to 2019, with states of upheaval occurring only during short-lived periods. Overall, Malaysian housing prices were generally steady between 2010 and 2019, albeit this has shifted slowly in recent years as economic turmoil faded. This study provides empirical results to explain the situation of Malaysian house prices in the recent years.

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U.K. House Prices: Bubbles or Market Efficiency? Evidence from Regional Analysis

Cited by 8 publications

References 36 publications

Interdependence between foreigner housing acquisitions and housing price increase in Turkey during the COVID-19 pandemic era

Interdependence between foreigner housing acquisitions and housing price increase in Turkey during the COVID-19 pandemic era

Twenty Years of Mortgage Banking in Slovakia

Prospecting Housing Bubbles in Malaysia

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