Does internet search intensity predict house prices in emerging markets?: a case of India

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.