[This article is also published at the BigQ]

Median housing prices across New Zealand increased by 19.8% year-on-year (YOY) in October 2020. It is one of the largest price surges in the world as shown in Figure 1. However, the sudden common rebound of house prices in most of the developed economies during the pandemic is mind-blowing as the economies are encountering unprecedented recessions. As the rebounds are almost synchronised after the outbreak of the pandemic, it provides a natural experiment to test the alternative hypotheses on the causes of house price changes.

First, Figure 1 compares the latest YOY changes in the house prices of Australia, Canada, European Union, New Zealand, UK and US. All the six economies recorded strong growth in house prices (from 3.9% in CAN, 4.5% in AUS, 5.2% in EU, 5.7% in the US, 7.6% in the UK to 19.8% in NZ). Many of these economies were facing a downward or levelling-off trend of their house prices before the pandemic, but their house prices rebounded like a synchronised switching after the outbreak of the pandemic. …

“Inflation is always and everywhere a monetary phenomenon” — Milton Friedman

“He who controls the money supply of a nation controls the nation” — James A. Garfield

Old Definition of Money

Before 1971, when most of the currencies were backed by commodities, such as gold or silver, it was not so easy to substantially increase currency supply. However, since the abandonment of the Bretton Woods Agreement and the Gold Standard, currencies in the world have become “fiat”. Central Banks have increased trillions of currency after the 2008 Global Financial Crisis (GFC) and the COVID-19 pandemic. Figure 1 shows the total assets of the US Federal Reserve. It increased from about US$1T before the GFC to about US$4.5T by means of several rounds of Quantitative Easing (QE). It levelled off since 2015, but then in the wake of the COVID-19 pandemic in early 2020, it sharply increased from US$4T to about US$7.5T (US$7,334,809,000,000 in Jan. …

It is an endless debate on the causes of housing price change. Among them, there are two main strands of argument, viz. (1) housing supply and (2) money supply. This article does not discuss about their theoretical justifications, as we have done a lot before (Yiu, 2020). Instead, I am going to update a recent empirical evidence on this debate.

House Supply and House Prices

Taghizadeh-Hesary, Yoshino and Chiu (2019) of ADBI analyze a time series dataset in 1999–2018 of macroeconomic variables and housing prices in Hong Kong, with both housing supply factors and money supply factors. They find that, among others, “housing supply has never been statistically significant; housing supply is not responsible for or affected by, or does it respond to price changes.” (p. 18) Yet, this is only a weak test on the housing supply hypothesis, as an insignificant result does not confirm or reject the hypothesis. Interestingly, even after the suspension/reduction of land sale and subsidized housing construction after the early 2000s (Figure 1), there is still no significant association between housing supply and housing prices. …

“Don’t eat fast, but eat and fast” … by Edward Yiu

"Fast” is a weird word that it has two unrelated meanings, but both are very commonly used in daily conversation. Fast means quick or stop eating. For example, we have fast food breakfast today.

Sarcastically, recent research find that fast food and fasting have opposite effects on our health. They are found to be toxification objects and a detoxification process respectively. Our generation has been suffered from eating too much fast food, because it was considered modern, cost-effective, tasty and healthy. When we were young, people had no idea about the harmfulness of fast food. …

Law of Diminishing Marginal Utility

The Law of Diminishing Marginal Utility is one of the most well-known economic laws. As it is intuitively logical and plausible that there have been very few empirical tests on it. Investopedia states it as the following: “all else equal as consumption increases the marginal utility derived from each additional unit declines.” It is often explained by using our experience of over-eating. For example, when you are very hungry, the first banana you eat would be lovely, but the second and the third ones may gain less satisfaction. The fourth and the fifth ones may even be considered negative, when the stomach is full or overloaded. …

This year because of the COVID-19 pandemic, many examinations are conducted online. It seemed to be a piece of good news to the candidates in the beginning, as online examination implies an open-book (search-engine-on) mode of testing. At least it is very hard to enforce a close-book test online.

However, it results in many anxiety triggers! Some are technical issues such as internet interruption during the exam, others are misunderstandings of the instructions, etc. Based on these experiences, we now get some ideas on what is triggering anxiety and how can we develop mitigation measures, at least for online examinations.

Uncertainty but of Serious Consequences

This study may explain why modern life (especially after the common use of online services) is associated with the global deterioration in mental health, including anxiety and panic attack. …

The COVID-19 pandemic has triggered a global deterioration in mental health (Johnson, 2020; Duncan & Butler, 2020; Mingpao, 2020). The anxiety of infecting the virus, the worry of losing jobs and businesses, the plummets in prices (wealth), the long-term forced-stay at home during lockdowns, the endless working hours of work-from-home, etc. are probably some of the reasons.

Some preliminary studies find alarming impacts. For example, a study in China by Huang & Zhao (2020), another one in Spain by Ozamiz-Etxebarria et al. (2020), and one in Slovenia by Kavcic, Avsec & Kocjan (2020) find negative impacts of COVID-19 on mental health. In addition, Rajkumar (2020) and Vindegaard & Benros (2020) review the studies across-the-board also conclude negative effects of the pandemic on mental health. (As a caveat, there are studies that find no or little changes, Schafer et al., 2020; Wang et al., …

Urban economists explain why cities exist by the agglomeration economies, that is people and firms prefer agglomerating in the city centers, where supply chains, job opportunities and amenities are better. However, it can also result in negative externalities such as traffic congestion, unaffordable housing, high living costs and air pollution, etc.

These intrinsic conflicts between agglomeration economies and negative externalities have made cities difficult to thrive. Glaeser (2007) even argue that residential location choice is simply a trade-off among the four preferences in the following utility maximization formula:

“(1) Income + Amenities - Housing Costs - Transportation Costs” (p.5)

The classic Alonso-Muth-Mills model founded the cornerstone of urban economics by the land price gradient and commuting cost gradient from city center to the peripheral. It predicts that “the price of land must fall with distance just enough to compensate commuters for longer commutes.”…

Many people simply take it for granted that high housing prices can only be solved by increasing housing supply. They claim that this is the Law of Supply and so it must be true.

However, on one hand, they cannot provide any empirical evidence, and on the other hand, they cannot answer how many more housing supply can help reduce how many percent in housing prices, other things being equal.

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In fact, there have been many studies confirming that housing supply is the response to the housing price change, rather than the cause. For example, both Glindro et al. (2007) and Belke & Keil (2017) found a positive and significant association between land or housing supply and housing prices. If it is the so-called Law of Supply, then the hypothesis should be a negative sign, as more supply would make prices down. …

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On Sep 15, the United Nations (UN, 2020a) published the Global Biodiversity Outlook 5 (GBO5), reporting the “achievements” of the United Nations Decade on Biodiversity 2011–2020. Ten years ago, the United Nations Convention on Biological Diversity (CBD) set 20 targets of stopping biodiversity loss coined as the Aichi Biodiversity Targets (ABT) for the Strategic Plan for Biodiversity 2011–2020 (Figure 1), GBO-5 provides a global summary of progress towards the ABT, summarising the findings of the IPBES Global Assessment on Biodiversity and Ecosystem Services, as well as the national reports provided by countries on their implementation of the CBD.

There are 20 targets in the ABT, divided into 5 categories (Strategic Goals A, B, C, D, E, see Figure…



ecyY is the Founder of Real Estate Development and Building Research & Information Centre REDBRIC

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