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Does Internet Search Intensity Predict House Prices in Emerging Markets? A Case of India

Ekta Jalan, Venkatesh Panchapagesan and Madalasa Venkataraman
2017
Working Paper No
537
Body

We examine whether internet search intensity, as captured by Google’s Search Volume Index (SVI), predicts house price changes in an emerging market like India.  Emerging markets have low internet penetration and high information asymmetry with a dominant unorganized real estate market.  Like in developed markets such as the US, we find that internet search intensity strongly predicts future house price changes.  A simple rebalancing strategy of buying a representative house in the city with the greatest change in search intensity and selling a representative house in the city with the smallest change in search intensity each quarter yields an annualized excess (over risk-free government t-bills) return of 4 percent.

Key words
Google Trends Search Volume Index, House Price Index, Search Intensity, Housing price forecasting, India
WP No. 537.pdf (414.93 KB)

Does Internet Search Intensity Predict House Prices in Emerging Markets? A Case of India

Author(s) Name: Ekta Jalan, Venkatesh Panchapagesan and Madalasa Venkataraman, 2017
Working Paper No : 537
Abstract:

We examine whether internet search intensity, as captured by Google’s Search Volume Index (SVI), predicts house price changes in an emerging market like India.  Emerging markets have low internet penetration and high information asymmetry with a dominant unorganized real estate market.  Like in developed markets such as the US, we find that internet search intensity strongly predicts future house price changes.  A simple rebalancing strategy of buying a representative house in the city with the greatest change in search intensity and selling a representative house in the city with the smallest change in search intensity each quarter yields an annualized excess (over risk-free government t-bills) return of 4 percent.

Keywords: Google Trends Search Volume Index, House Price Index, Search Intensity, Housing price forecasting, India
WP No. 537.pdf (414.93 KB)