Publication Type

Journal Article

Version

acceptedVersion

Publication Date

2-2016

Abstract

This paper investigates whether real house price appreciations can be attributed to the surge in real capital inflows into Singapore. We proxy capital flows by using the amount of foreign direct investments (FDI) to real estate capturing the foreign purchases of property in Singapore which we deflate by the private residential property price index. Notwithstanding the absence of a cointegrating relationship, our results support the hypothesis that lagged short term fluctuations in capital inflows are positively associated with the growth rates of house prices over the last decade. We also provide evidence that macroprudential measures implemented by Singapore reduced the impact of capital inflows on house price appreciation by more than half, suggesting the effectiveness of such market cooling measures in weakening the credit growth channel.

Keywords

Capital Inflows, House Prices, Macroprudential Policy

Discipline

Asian Studies | Public Economics | Real Estate

Research Areas

Applied Microeconomics

Publication

Journal of International Commerce, Economics and Policy

Volume

7

Issue

1

First Page

1

Last Page

21

ISSN

1793-9933

Identifier

10.1142/S179399331650006X

Publisher

World Scientific

Copyright Owner and License

Authors

Additional URL

https://doi.org/10.1142/S179399331650006X

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