Policy-Driven Housing Cycle: The Hong Kong Case of Supply Intervention

Research output: Journal PublicationsJournal Article (refereed)

Abstract

his paper builds on the literature that shows policy often plays a key role in housing cycles. Using the cointegration approach which focuses on the supply and demand dynamics of the housing market, and with explicit consideration of housing price expectations proxied by the price-earning ratio in financial markets, this paper identifies two cointegrating relations: a long run demand-side relation that involves housing property price, interest rate, price expectation and income; and a supply-side relation that involves private housing completion, property price, interest rate, and building and land costs. Based on Hong Kong data from 1990 – 2012, which covers big cycles in the housing market, this paper suggests that policies to augment or restrain housing supply in the attempt to stabilize housing prices have been counterproductive.
Original languageEnglish
Pages (from-to)375 - 396
JournalInternational Real Estate Review
Volume20
Issue number3
Publication statusPublished - Nov 2017

Fingerprint

Price expectations
Property prices
Hong Kong
Housing market
Interest rates
Housing prices
Supply side
Costs
Price earnings ratio
Housing supply
Cointegration
Financial markets
Income

Cite this

@article{877aa9fc138f4aaca125ac25c6c79cd4,
title = "Policy-Driven Housing Cycle: The Hong Kong Case of Supply Intervention",
abstract = "his paper builds on the literature that shows policy often plays a key role in housing cycles. Using the cointegration approach which focuses on the supply and demand dynamics of the housing market, and with explicit consideration of housing price expectations proxied by the price-earning ratio in financial markets, this paper identifies two cointegrating relations: a long run demand-side relation that involves housing property price, interest rate, price expectation and income; and a supply-side relation that involves private housing completion, property price, interest rate, and building and land costs. Based on Hong Kong data from 1990 {\^a}€“ 2012, which covers big cycles in the housing market, this paper suggests that policies to augment or restrain housing supply in the attempt to stabilize housing prices have been counterproductive.",
author = "WONG, {Wai Chung} and HO, {Lok Sang}",
year = "2017",
month = "11",
language = "English",
volume = "20",
pages = "375 -- 396",
journal = "International Real Estate Review",
issn = "2154-8919",
number = "3",

}

Policy-Driven Housing Cycle: The Hong Kong Case of Supply Intervention. / WONG, Wai Chung; HO, Lok Sang.

In: International Real Estate Review, Vol. 20, No. 3, 11.2017, p. 375 - 396.

Research output: Journal PublicationsJournal Article (refereed)

TY - JOUR

T1 - Policy-Driven Housing Cycle: The Hong Kong Case of Supply Intervention

AU - WONG, Wai Chung

AU - HO, Lok Sang

PY - 2017/11

Y1 - 2017/11

N2 - his paper builds on the literature that shows policy often plays a key role in housing cycles. Using the cointegration approach which focuses on the supply and demand dynamics of the housing market, and with explicit consideration of housing price expectations proxied by the price-earning ratio in financial markets, this paper identifies two cointegrating relations: a long run demand-side relation that involves housing property price, interest rate, price expectation and income; and a supply-side relation that involves private housing completion, property price, interest rate, and building and land costs. Based on Hong Kong data from 1990 – 2012, which covers big cycles in the housing market, this paper suggests that policies to augment or restrain housing supply in the attempt to stabilize housing prices have been counterproductive.

AB - his paper builds on the literature that shows policy often plays a key role in housing cycles. Using the cointegration approach which focuses on the supply and demand dynamics of the housing market, and with explicit consideration of housing price expectations proxied by the price-earning ratio in financial markets, this paper identifies two cointegrating relations: a long run demand-side relation that involves housing property price, interest rate, price expectation and income; and a supply-side relation that involves private housing completion, property price, interest rate, and building and land costs. Based on Hong Kong data from 1990 – 2012, which covers big cycles in the housing market, this paper suggests that policies to augment or restrain housing supply in the attempt to stabilize housing prices have been counterproductive.

M3 - Journal Article (refereed)

VL - 20

SP - 375

EP - 396

JO - International Real Estate Review

JF - International Real Estate Review

SN - 2154-8919

IS - 3

ER -