The effect of real estate speculation on the growth of economics in Lithuania

• Дата: 2010
• Автори: Simanaviсiene, Zaneta, Sliupas, Rokas
• Формат: Стаття
• Мова: English
• Опубліковано: Інститут економіки промисловості НАН України 2010
• Назва видання: Економічний вісник Донбасу
• Теми: International and Regional Economics
• Онлайн доступ: http://dspace.nbuv.gov.ua/handle/123456789/23995
• Назва журналу: Digital Library of Periodicals of National Academy of Sciences of Ukraine
• Цитувати: The effect of real estate speculation on the growth of economics in Lithuania / Zaneta Simanaviсiene, Rokas Sliupas // Економічний вісник Донбасу. — 2010. — № 4(22). — С. 89-96. — Бібліогр.: 10 назв. — англ.

European countries with transition economies are suffering from unemployment and fluctuating prices, now being plagued by rampant real estate bubble. One of the major social and economic problems in recent years has been the sustained real estate price spiral. The excessively high real estate price means worsening affordability, mortgage payment defaults and impacts the economy’s growth. Present real estate boom is an archfiend wielding terrible power, capable of blowing out the flickering signs of a hopeful economic recovery. It is a common belief that the presence of bubbles in real estate price did impact on the economy and usually caused by speculative activities. Countries, wishing to reduce recession or prevent financial crisis, have to monitor and supervise the real estate market. This paper is designed to evaluate the contribution of speculative activities to real estate price hike. An empirical model is presented that allows for decomposition of house price appreciation into that driven by economic and demographic forces and that resulting from speculative demand. Lithuania is taken as an example of transition country due to its unique historical and financial situation. Main conclusion is that slowdown of accumulation in real estate market and slowed down growth in construction sector leads to real estate market recession as well as to economic slowdown. Key words: real estate speculation, real estate price bubble, real estate market crisis.