Explaining House Price Dynamics: Isolating the Role of Non-Fundamentals

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• Professor Joseph Ooi, National University of Singapore
• Wednesday 19 November 2014, 16:00-17:00
• Mill Lane Lecture Room 4.

If you have a question about this talk, please contact Clare Eaves.

This paper examines the role of non-fundamentals-based sentiment in house price dynamics, including the well-documented volatility and persistence of house prices during booms and busts. To measure and isolate sentiment’s effect, we employ survey-based indicators that proxy for the sentiment of three major agents in housing markets: home buyers (demand side), home builders (supply side), and lenders (credit suppliers). After orthogonalizing each sentiment measure against a broad set of fundamental variables, we find strong and consistent evidence that the changing sentiment of all three sets of market participants predicts house price appreciation in subsequent quarters, above and beyond the impact of changes in lagged price changes, fundamentals and market liquidity. Moreover, housing market sentiment and its effect on real house prices is highly persistent. The results also reveal that the dynamic relation between sentiment and house prices can create feedback effects which contribute to the persistence typically observed in house price movements during boom and bust cycles.

Biography: Joseph Ooi is the Deputy Head (Academic) at the Department of Real Estate, National University of Singapore (NUS). He is a Fellow of the NUS Teaching Academy and Director of the NUS Graduate Certificate in Real Estate Finance. Joseph is currently a Visiting Scholar at the University of Cambridge. Joseph has published more than 40 peer-reviewed papers on Real Estate Investment Trusts (REITs) and Real Estate Development in top real estate journals, such as Real Estate Economics, Journal of Real Estate Finance and Economics, Journal of Real Estate Research, Urban Studies, Regional Science & Urban Economics, Journal of Regional Science and Journal of Money, Credit & Banking. Joseph has won more than fifteen research awards and three outstanding service awards internationally. He was a recipient of the NUS Young Researcher Award (2005). A highly versatile scholar who excels at teaching a broad range of subjects, Joseph won the Outstanding Educator Award (2012), which is the highest award for teaching in NUS . Joseph won the International Real Estate Society’s Achievement Award (2008) for outstanding contribution to research, education and practice. Joseph is the Associate Executive Director of the International Real Estate Society. He also sits on the Board of Directors of the Asian Real Estate Society as well as on the editorial of ten peer-reviewed real estate journals. He pioneered the NUS MBA with Specialization in Real Estate and served as its founding director from 2004 to 2006. A former director of the NUS M .Sc. (Real Estate), Joseph was an external examiner for University of Reading’s graduate real estate programmes (2011-2014). Prior to joining NUS , Joseph has extensive work experience in both the local and international real estate markets. He holds B.Sc. and M.Sc. degrees in Real Estate from NUS and a PhD in Finance from the University of Manchester (formerly UMIST ).

This talk is part of the Land Economy Departmental Seminar Series series.

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• Land Economy Departmental Seminar Series
• Mill Lane Lecture Room 4

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