House Prices and Bubbles in New Zealand

Patricia Fraser, Martin Hoesli and Lynn Mc Alevey
Additional contact information
Patricia Fraser: University of Aberdeen Business School
Lynn Mc Alevey: University of Otago, Department of Finance and Quantitative Analysis

No 06-20, Swiss Finance Institute Research Paper Series from Swiss Finance Institute

Abstract: This paper studies actual (real) house prices relative to fundamental (real) house values in New Zealand for the period 1970-2005. We find disparities between actual and fundamental house prices in the early 1970s and 1980s and from 2000 to date. These deviations are found to be substantially more pronounced than for New Zealand stocks. Contrary to the results that have been reported for many other countries, however, there is no evidence of a deviation in the latter part of the 1980s. Finally,we find that the current deviation of house prices from fundamentals is due to price dynamics rather than an overreaction to fundamentals.

Keywords: real house prices; real disposable income; fundamentals; present value; time-varying risk; bubbles; New Zealand. (search for similar items in EconPapers)
JEL-codes: G12 G18 R31 (search for similar items in EconPapers)
Pages: 38 pages
Date: 2006-10
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Citations: View citations in EconPapers (4)

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Related works:
Journal Article: House Prices and Bubbles in New Zealand (2008)
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Persistent link: https://EconPapers.repec.org/RePEc:chf:rpseri:rp0620

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