Determinants of house prices in nine Asia-Pacific economies

Abstract:

The paper investigates the characteristics of house price dynamics and the role of institutional features in nine Asia-Pacific economies during 1993-2006. On average, house prices tend to be more volatile in markets with lower supply elasticity and a more flexible business environment. At the national level, the current run-up in house prices mainly reflects adjustment to improved fundamentals rather than speculative housing bubbles. However, evidence of bubbles does exist in some market segments.

JEL Classification Numbers: G12, R31

Keywords: Asia-Pacific economies, house price dynamics, housing bubble, house price overvaluation, mean reversion, persistence parameter.