The Impact of Real Estate Prices:Noise Traders’ Self-Fulfilling Expectations and Market Stress
||Hung, KuoChe; Chen, MingChi; Huang, LingYu
||The Impact of Real Estate Prices:Noise Traders’ Self-Fulfilling Expectations and Market Stress
||18th Annual European Real Estate Society Conference in Eindhoven, the Netherlands
||This paper examines whether noise traders generated by self-fulfilling mechanisms cause irrational price volatility. Because their self-fulfilling expectations are based on market sentiment, the regulators need to stabilize the prices through policy announcements or policy tools. This study analyzes noise traders’ self-fulfilling expectation in the China’s market where government strongly interfere. We find that asymmetric information may initiate noise traders into self-fulfilling expectation, and government is unsuccessful to control the house price shooting. We further consider the influence of market state switching. It finds that market presents evidence of self-fulfilling expectation, and also increased price volatility counteracts government intervention. Finally, other financial markets except stock are still ineffectiveness by controlling contagion effect.
||real estate price, information asymmetry, selffulfilling expectations
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||H1: Shopping Centres
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