Are we living in a bubble?
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School of Business | Bachelor's thesis
AbstractHousing prices in Helsinki metropolitan area have risen rapidly ever since the mid-nineties. This has led to speculation on housing being overvalued in Helsinki metropolitan area. Some even fear that we are living in a housing bubble that is about to burst. In this paper I studied whether we have a housing bubble in Helsinki metropolitan area. I investigated this by testing if fundamental factors, such as income and lending rate, justify the increase in housing prices. This was done with a cointegration analysis. Based on my analysis housing prices reflect the fundamentals, meaning that we do not have a housing bubble in Helsinki metropolitan area.
Thesis advisorLof, Matthijs
housing market, housing prices, housing bubble, ADF-test, cointegration, Engle-Granger test