An application of the ARIMA model to real‐estate prices in Hong Kong

Technical analysis lies on the premiss that short‐term market price at any time is revealed by pattern of prior price movements. Tests empirically the pattern of the real estate prices by employing the ARIMA analysis. Results strongly show that there exist cyclical trends in the office and industrial property prices in Hong Kong. The forecasting method can provide an indication of short‐term market direction, a sense of whether or not the movement will be small or large, and advance warning well ahead of any turning points supplementary to investment strategy. The investor may wish to incorporate forecasts from an ARIMA model into his investment strategy, for timing purposes.