The Anatomy of a Housing Bubble: Overconfidence, Media and Politics

Bucchianeri, Grace Wong

doi:10.2139/ssrn.1877204

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The Anatomy of a Housing Bubble: Overconfidence, Media and Politics

34 Pages Posted: 3 Jul 2011

See all articles by Grace Wong Bucchianeri

Grace Wong Bucchianeri

University of Pennsylvania - Real Estate Department

Date Written: April 1, 2011

Abstract

This paper investigates a potential housing bubble in Hong Kong in the 1990s. A within-city analysis is performed using a monthly panel data set on 324 large-scale housing complexes (estates) located in 17 out of 18 districts in Hong Kong. The empirical analysis focuses on crosssectional variations in home prices each month during the bubble and controls for housing price fundamentals using district-month fixed effects. I find evidence consistent with an overconfidence-driven speculation bubble. The same analysis is performed using a placebo period prior to the price upswing and no similar patterns are found. I propose media coverage and political uncertainties as potential causes of the bubble.

Keywords: Housing prices, Housing bubbles, Media, Politics

JEL Classification: R31, L85

Suggested Citation: Suggested Citation

Bucchianeri, Grace Wong, The Anatomy of a Housing Bubble: Overconfidence, Media and Politics (April 1, 2011). Available at SSRN: https://ssrn.com/abstract=1877204 or http://dx.doi.org/10.2139/ssrn.1877204