Bubble geometry and chaotic pricing behaviour
Eves, Chris, Wright, Christopher , & Jefferies, Rod (2008) Bubble geometry and chaotic pricing behaviour. In Proceedings from the PRRES Conference - 2008, Pacific Rim Real Estate Society, Kuala Lumpur, Malaysia.
This paper is a deductive theoretical enquiry into the flow of effects from the geometry of price bubbles/busts, to price indices, to pricing behaviours of sellers and buyers, and back to price bubbles/busts. The intent of the analysis is to suggest analytical approaches to identify the presence, maturity, and/or sustainability of a price bubble. We present a pricing model to emulate market behaviour, including numeric examples and charts of the interaction of supply and demand. The model extends into dynamic market solutions myopic (single- and multi-period) backward looking rational expectations to demonstrate how buyers and sellers interact to affect supply and demand and to show how capital gain expectations can be a destabilising influence – i.e. the lagged effects of past price gains can drive the market price away from long-run market-worth. Investing based on the outputs of past price-based valuation models appear to be more of a game-of-chance than a sound investment strategy.
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|Item Type:||Conference Paper|
|Keywords:||property market behaviour, market equilibrium, market-worth, price bubble, rational expectations, value-estimate|
|Subjects:||Australian and New Zealand Standard Research Classification > COMMERCE MANAGEMENT TOURISM AND SERVICES (150000) > BANKING FINANCE AND INVESTMENT (150200) > Financial Econometrics (150202)|
Australian and New Zealand Standard Research Classification > COMMERCE MANAGEMENT TOURISM AND SERVICES (150000) > COMMERCIAL SERVICES (150400) > Real Estate and Valuation Services (150403)
|Divisions:||Past > QUT Faculties & Divisions > Faculty of Built Environment and Engineering|
Past > Schools > School of Urban Development
|Copyright Owner:||Copyright 2008 [please consult the authors].|
|Deposited On:||27 Nov 2009 09:37|
|Last Modified:||11 Aug 2011 04:26|
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