The "unreal" estate : how does investor sentiment predict the future "real" estate returns of residential property in Hong Kong?

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The "unreal" estate : how does investor sentiment predict the future "real" estate returns of residential property in Hong Kong?

 

Author: Lam, Hei Ling Charles
Title: The "unreal" estate : how does investor sentiment predict the future "real" estate returns of residential property in Hong Kong?
Degree: D.B.A.
Year: 2013
Subject: Real property -- Prices -- China -- Hong Kong.
Investments.
Hong Kong Polytechnic University -- Dissertations
Department: Faculty of Business
Pages: ix, 134 leaves : illustrations ; 30 cm
Language: English
InnoPac Record: http://library.polyu.edu.hk/record=b2825643
URI: http://theses.lib.polyu.edu.hk/handle/200/7975
Abstract: This paper investigates whether investor sentiment affects the pricing of residential property in Hong Kong. Given the high volatility of housing prices in Hong Kong and the cycles of boom and bust, the traditional finance theory may not fully explain the market behavior. I adopt the methodology of Baker and Wurgler (2006) in constructing a new measure of investor sentiment for the Hong Kong property market. Using this measure, I investigate whether sentiment affects property prices in Hong Kong by examining the association between sentiment and future price movement of Hong Kong residential properties. The results confirm that sentiment is negatively related to future returns of Hong Kong residential properties, with a lagged effect from 3 to 12 months. Consistent with the theoretical prediction that sentiment should have stronger effect on more speculative assets, I find that sentiment has a stronger effect on the prices of smaller units in Kowloon district than on larger units in all three Hong Kong districts.

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