This paper tests empirically the relationship between real interest rate and housing return in Hong Kong. The time series date from the first quarter of 1984 to the first quarter of 2009. Employing multiple regression analysis with autoregressive and lagged independent variables, it shows that...

By reviewing the previous three asset bubble implosions, viz. (1) the “Lost Decade” of Japan in the 1980s; (2) the Asian Financial Crisis in Hong Kong in 1997; and (3) the Financial Tsunami in the USA in 2008, a common symptom of negative real interest rate is very clearly revealed before the...