Investment Demand and Housing Prices in an Emerging Economy

30 Pages Posted: 11 Sep 2012

See all articles by Ming-Chi Chen

Ming-Chi Chen

National Sun Yat-sen University - Department of Finance

Chin-Oh Chang

National Chengchi University (NCCU) - Department of Land Economics

Chih‐Yuan Yang

Department of Civic Education and Leadership, National Taiwan Normal University, Taiwan 

Bor-Ming Hsieh

Chang Jung Christian University

Date Written: September 10, 2012

Abstract

This paper hypothesizes that the increase in money supply induced by rapid economic growth leads to strong investment demand in the Taiwanese housing market. A threshold model is used to confirm money supply as the key threshold variable. When the growth rate of money supply is below the model’s estimated threshold value, household number, income, and user cost of housing capital are significant variables. It appears that service demand and housing supply are essential in creating the linear movement of housing prices. However, when the growth rate of money supply exceeds the threshold value, stock prices and the inflation rate become important. These findings suggest that non-linear movement of housing prices is primarily driven by investment demand.

Keywords: Taiwan, housing market

Suggested Citation

Chen, Ming-Chi and Chang, Chin-Oh and Yang, Chih-Yuan and Hsieh, Bor-Ming, Investment Demand and Housing Prices in an Emerging Economy (September 10, 2012). Journal of Real Estate Research, Vol. 34, No. 3, 2012, Available at SSRN: https://ssrn.com/abstract=2144276

Ming-Chi Chen

National Sun Yat-sen University - Department of Finance ( email )

No.70, Lianhai Rd., Gushan District,
Kaohsiung City
Taiwan

HOME PAGE: http://cm.nsysu.edu.tw/~mcchen/index.html

Chin-Oh Chang (Contact Author)

National Chengchi University (NCCU) - Department of Land Economics ( email )

Taipei 11623
Taiwan
+886 2 29387478 (Phone)
+886 2 29390251 (Fax)

Chih-Yuan Yang

Department of Civic Education and Leadership, National Taiwan Normal University, Taiwan 

No. 162, Section 1, Heping E. Rd.,
Taipei City, 10610
Taiwan

Bor-Ming Hsieh

Chang Jung Christian University ( email )

396, Chang Jung Rd., Sec.1
Kway Jen
Tainan, 71101
Taiwan

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