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Title: The forecasting capacity of housing price expectations
Authors: Hui, ECM 
Wong, JTY
Keywords: Price expectations
Housing market
Hong Kong
Issue Date: 2009
Publisher: Global Social Science Institute
Source: International real estate review, 2009, v. 12, no. 1, p. 39-61 How to cite?
Journal: International real estate review 
Abstract: This study captures the essential elements of the price expectations of market participants in a rising market. Adopting a forward-looking approach, this paper explores the effectiveness of expectations as an indicator of forthcoming housing price changes in Hong Kong. Examination of the quarterly survey data from December 2003 to September 2007 indicates that both homeowners and non-homeowners tend to overestimate the probability of future housing price increases yet underestimate its volatility. This adds weight to the argument that market participants are generally not rational in the prediction of price movement. Homeowners, investors and potential home buyers have more or less the same level of confidence about the future market outlook. Like non-owners, they expect higher prices. The number of correct forecasts exceeds incorrect forecasts, suggesting that overall price expectations are fairly close to realization. It can be broadly concluded that the aggregate price expectations in the long run can be an appropriate forecasting tool for future market performance.
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