Availability, Affordability and Volatility: The Case of Hong Kong Housing Market

Leung, Charles Ka Yui; Tang, Edward Chi Ho

doi:10.2139/ssrn.2524685

Cited by 23 publications

(23 citation statements)

References 67 publications

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“…15 Hence, the Hong Kong government almost control the land supply of Hong Kong and influence the land price. Leung and Tang (2015b), among others, promote the view that the Hong Kong government effectively operates as a durable goods monopoly with limited supply, dynamically tradeoffs the quantity of land and revenue that can be generated from the land sale. Figure 5a demonstrates the increasing tendency for the Hong Kong government to depend on real-estate related tax.…”

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confidence: 99%

Why is the Hong Kong Housing Market Unaffordable? Some Stylized Facts and Estimations

Leung¹,

Ng²,

Tang

2020

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The house price in Hong Kong is well-known to be "unaffordable." This paper argues that the commonly used house price-to-income ratio may be misleading in an economy with almost half of the population living in either public rental housing or subsidized ownership. Moreover, we re-focus on the relationships between economic fundamentals and the housing market of Hong Kong. While the aggregate GDP, population and longevity continue to grow, the real wage and household income fall behind. The trend component of the real GDP growth suffers a permanent downward shift after the first quarter of 1989 (a "political scar"). The trend component of real wage growth is close to zero, and the counterpart of real consumption and real investment decline steadily. Meanwhile, the trend component of the real housing rent and price display patterns that decouple from the macroeconomic variables. We also discuss the directions for future research.

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confidence: 99%

Why is the Hong Kong Housing Market Unaffordable? Some Stylized Facts and Estimations

Leung¹,

Ng²,

Tang

2020

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“…Leung and Tang (2015a) use Granger causality tests and vector autoregressive modelling techniques to demonstrate that initial public offerings (IPO) of Chinese firms in the Hong Kong stock market influence property prices. Leung and Tang (2015b) suggest that short supply in both the public and private housing markets drives up property prices in Hong Kong. With regard to the macro-determinants of retail property values, Tsolacos (1995) andD'Arcy, McGough, andTsolacos (1997) recognize the effects of GDP and consumer expenditure on retail rental values in the UK and some European cities.…”

Section: Literature Reviewmentioning

confidence: 99%

Nexus between visitor arrivals and residential property rents in Hong Kong

Chong

Yiu

2017

Pacific Economic Review

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Cost of living in Hong Kong is among the highest in the world. This paper investigates the effect of tourist arrivals on the residential property market in Hong Kong. It is demonstrated that the soaring number of tourists from mainland China is pushing up property rents in Hong Kong. The substantial accommodation need generated by the increasing number of students from China is another contributing factor.

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“…Thus, it is unlike that such buildings will be provided by a continuum of small developers, as some textbooks would assert. Among others, see Leung and Tang (2015) for more discussion for the institutional details of the Hong Kong market. 53 Among others, see Mas-Colell et al (1995) for more discussion of the signalling theory and reputation.…”

Section: Data and Popularity Index Constructionmentioning

confidence: 99%

What Account for the Differences in Rent-Price Ratio and Turnover Rate? A Search-and-Matching Approach

Huang

Leung

Tse³

2017

SSRN Journal

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We build an on-the-house-search model and show analytically that the rentto-price ratio (or rental yield) and turnover rate, which are frequently used metrics for the housing market, are jointly determined in equilibrium. We therefore adopt a simultaneous equation approach on matched sale-rental pairs in our empirical investigation, as a housing unit cannot be owner-occupied and renter-occupied at the same time. Our empirical results confirm a higher turnover rate is associated with a lower rent-to-price ratio, as predicted by the model. Furthermore, our results suggest a form of "dichotomy" in the empirical determinants of rental yield and turnover at the real-estate-development (RED) level: the demographic structure, and past return performance affect its turnover rate, while popularity, human capital environment, mortgage burden, and long run rent growth determine the rental yield. The robustness of our results are established through a series of tests. In addition to these findings, our tractable search-theoretic model, a ranking of more than 130 RED in Hong Kong based on the popularity index we construct, and the estimated brandpremium for different major real estate developers may also carry independent research and practical interests.

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Availability, Affordability and Volatility: The Case of Hong Kong Housing Market

Cited by 23 publications

References 67 publications

Why is the Hong Kong Housing Market Unaffordable? Some Stylized Facts and Estimations

Why is the Hong Kong Housing Market Unaffordable? Some Stylized Facts and Estimations

Nexus between visitor arrivals and residential property rents in Hong Kong

What Account for the Differences in Rent-Price Ratio and Turnover Rate? A Search-and-Matching Approach

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