We argue that shocks to a housing market are transmitted through the hierarchy of quality tiers within a housing market. The result is the prediction of waves of house price changes accompanied by changes in transaction volume. Our study is related to existing models of spatial ripple effects across housing markets. The data are from the Hong Kong housing market. The findings from Granger causality tests strongly support the argument that ripple or domino effects within a single housing market occur in response to external shocks.
Ma, Y. (2007). Dynamic house prices and trading volumes across quality tiers and upward mobility (CPPS Working Paper Series No.182). Retrieved from Lingnan University website: http://commons.ln.edu.hk/cppswp/86/