Theoretical aspects of housing market speculative bubble
Journal Title: Zarządzanie i Finanse - Year 2014, Vol 12, Issue 4
Abstract
This paper attempts to specify factors that have a major impact on creation and growth of speculative bubbles. First part describes the nature and character- istics of speculative bubbles on the assets markets. Further on the bubble is ana- lyzed in relation to the housing market, which is considered peculiar due to high transaction costs and diversity of housing properties. The analysis that has been carried out shows that speculative bubbles on housing markets are developed by a number of interconnected factors. An im- pulse for the bubble creation is often an effect of fundamental factors, which cause growth in demand and as a result a price rise due to the limited short-term sup- ply. Subsequently an anticipation for further price growth can be noticed. Next, if those anticipations are stimulated by an expansive banks policies in the area of mortgages, a vicious circle of price rises, price expectations and demand leads to a further growth of a speculative bubble. Negative consequences linked to this phenomenon can affect not only the real estate market but also the entire econ- omy.
Authors and Affiliations
Gabriel Główka
Keywords
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