Availability, Affordability and Volatility: The Case of Hong Kong Housing Market
75 Pages Posted: 16 Nov 2014
Date Written: September 14, 2014
Housing prices in Hong Kong have gained international attention. This study suggests that the housing supply may be insufficient. Consistent with previous studies, we confirm that merely increasing the land supply may not increase the housing supply. We also find preliminary evidence for widening income inequality, which, when combined with unavailability, can lead to unaffordability in the housing market. Given the current housing supply elasticity with respect to price, Hong Kong is not more volatile than major cities in the United States. Thus, improving housing availability and thereby increasing housing supply elasticity, could effectively decrease housing price volatility.
Keywords: Land policies, housing availability, housing affordability, housing volatility, Granger causality
JEL Classification: E30, R21, R31, R52
Suggested Citation: Suggested Citation