John Raftery

Breaking up methodological monopolies: a multi-paradigm approach to construction management research

A note written in response to: Seymour D. and Rooke, J. (1995). The culture of the industry and the culture research. Construction Management and Economics 13, 511-523.

A study of the Hong Kong property market: housing price expectations

The size and direction of correlation between housing price movements and expectations differ between housing actors and change over time in Hong Kong. A cross‐sectional market outlook survey was conducted in November 2000 to measure housing price expectations and their formation. The study challenges the traditional adaptive expectations theory and finds that the pessimistic mindset of market actors in a deflationary period was due to a lack of economic confidence – the root cause for weak expectations. It also suggests that there exist differential price expectations between different actors. Homebuyers and investors tend to be unrealistically overconfident in the long‐term performance of the real estate market. Evidently, the determination of house sale prices is predominantly forward‐looking, based more upon macroeconomic fundamentals than the past price trend.

Risk attitude and systematic bias in estimating and forecasting

This paper describes findings from the first phase of a research project investigating the modelling of risk and uncertainty in construction estimating and forecasting. The objectives of the project are to examine current methods and, experimentally, to explore techniques which offer the potential for the production of improved information from estimates and forecasts. Some of the causes of error and bias in both traditional deterministic and in probabilistic estimating and forecasting are described. The majority of the research in cognitive psychology which has led to the common assumption of errors and biases has been carried out with lay people thinking intuitively about problems. The present research is an attempt to test these biases in a domain-specific, non-intuitive context with individuals trained in that domain. The authors hypothesize that, if professional training has any value then they should find less evidence of bias than is the case in the general literature. Empirical results are reporte...

Factors involved in the success of Hong Kong construction and property entrepreneurs

Purpose – The purpose of this paper is to report a study investigating the success stories of six entrepreneurs in the Hong Kong construction and property field.Design/methodology/approach – Through in‐depth interviews, participants shared their experiences and the factors they perceived as contributing to their success.Findings – Evidence obtained from the interviews suggests what scholars mean by the Chinese entrepreneurial ethic is best understood as a combination of cultural values and strategizing behaviours.Research limitations/implications – Data collected in this study were restricted to the construction and property industry. However, the same combination of values and strategies would be an essential factor contributing to success in other industries, and therefore further exploration of this is encouraged.Originality/value – This paper explores the factors which successful Hong Kong construction and property entrepreneurs regarded as contributing to their success, it adds knowledge to the discu...

Income elasticity of housing consumption in Hong Kong: a cointegration approach

Income elasticity of housing expenditure is of considerable interest particularly to applied researchers in housing economics. However, there is a wide variation in the estimation of income elasticity. Such a variation is attributed to different specifications of estimation. This paper applies techniques developed in the literature of cointegration analysis to re-examine the income elasticity of housing consumption based on a long-run equilibrium model fitted with time-series data. Tests for unit roots are conducted to avoid spurious results in the estimation of the model. The use of the timeseries data generates some attractive properties. The results show that the short-run income elasticity is generally less than unity and the adjustment parameter is about 0.8. These results can be used to estimate the value of income elasticity of public and private housing residents, and of owners and renters separately.

Office Property Returns in Shanghai, Guangzhou, and Shenzhen

Commercial property development in China has been a growth industry in recent years. This article examines the returns on office property in the three major cities of Shanghai, Guangzhou, and Shenzhen in the period 1991 to 1997. Analyses based on the Security Market Line (SML) show that property investments in the office sector in Shanghai and Guangzhou have excess returns and that Shanghai office property tends to dominate the optimal portfolios due to its superior risk-adjusted returns. While equal returns in Shanghai, Guangzhou, and Shenzhen cannot be rejected, the Shanghai office property is subject to the least systematic risk, compared with all other cities. Hong Kong office property is included only in the less risky optimal portfolios. In addition, our results indicate that there is little correlation between the office property returns in Hong Kong and the office property in Guangzhou and Shenzhen. Guangzhou and Shenzhen office markets, which are geographically relatively close to Hong Kong, tend to be more volatile than the Shanghai office market. However, owing to Shenzhen’s proximity to Hong Kong, there is significant correlation between the returns of the office property in Shenzhen and the office property in Hong Kong.

The effects of money supply on construction flows

It is argued that money/credit supply is neutral with respect to the real sector. Existing studies have focused on the relationship between money supply and national output. However, this paper using data from Hong Kong (first quarter 1983–second quarter 1997) examines the extent to which fluctuations in the money supply cause (or Granger-cause) fluctuations in real construction activity. Specifically, it is found that: (i) construction activity flows and construction loans are cointegrated, but their lead-lag relationship cannot be established; (ii) there is a specific and strong causal relationship between the construction activity and the broadly defined money supply M3; and (iii) positive money-supply shocks have a larger effect on construction output than negative money-supply shocks.

Quasi-rational behaviour in the property and construction market

The notion of quasi-rationality is discussed and some new empirical evidence of actual (as revealed in experiments) rather than theorized behaviour is presented. Results from a series of experiments show evidence of money illusion in perception of salary levels and frame dependent risk aversion in agreeing contracts for property development. The implications for the property and construction markets and for research in property and construction economics are discussed.

Money illusion in consumer perception of housing transactions

Money illusion is a bias in the assessment of the real value of economic transactions, induced by their nominal evaluation. By definition, money illusion may only be manifested in the presence of inflation. This paper presents the results of an experiment which shows that the actual behaviour of subjects departed from theoretical expectations and that the subjects failed to recognize the underlying real values and instead made nominal evaluations. The evidence has the further implication that, in the absence of some house price escalation, there may be a tendency for vendor’s asking prices to be “sticky”. Thus, in these circumstances the asking price of the property will tend to function less well as a signal of relative scarcity in the marketplace.