Foreign buyers and housing price dynamics

Meng-Yi Tai, Shih Wen Hu, Chi-Chur Chao and Vey Wang

International Review of Economics & Finance, 2017, vol. 52, issue C, 368-379

Abstract: This paper analyzes the short- and long-run effects of foreign buyers on housing prices in an open economy with the flexible exchange-rate system. In the long run, the changes in housing prices depend on the price elasticity of foreign buyers’ housing demand, while the adjustments in the exchange rate depend on the degree of international capital mobility. Nonetheless, in the short run, the changes in housing prices and exchange rates can be over- or under-shot or mis-adjusted, dependent partly on the length of time between the policy announcement and its implementation. The housing prices could fall in the short run if foreign housing demand is price-elastic, while the exchange rates could be over-shot if capital is less mobile.

Keywords: E10; F31; Housing prices; Foreign demand (search for similar items in EconPapers)
Date: 2017
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Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:reveco:v:52:y:2017:i:c:p:368-379

DOI: 10.1016/j.iref.2017.03.013

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