Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/222715 
Year of Publication: 
2019
Series/Report no.: 
ADBI Working Paper Series No. 948
Publisher: 
Asian Development Bank Institute (ADBI), Tokyo
Abstract: 
Hong Kong, China's housing market witnessed dramatic appreciations recently, with the price index for private domestic housing units being 3 times higher than 10 years ago. This trend is supported by both internal and external factors, as illustrated in this paper. By providing a theoretical model and empirical analysis on the key variables influencing housing prices, we find that changes in housing price index reinforce price trends in the long term. Hong Kong, China's dollar quantitative easing, and the gross domestic product of the People's Republic of China (PRC) are positively related to housing prices and negatively to lending. The inability to increase supplies in response to rising demand since 2003 has also much to do with the skyrocketing prices. Moreover, mortgage-to-total loans value is shrinking due to the unaffordability of housing units at current prices. This trend has to be tackled in time, otherwise the PRC may incur severe consequences similar to Japan's experience in the 1990s.
Subjects: 
housing bubble
housing prices
housing market
quantitative easing (QE)
monetary policy
JEL: 
R31
E51
E31
Creative Commons License: 
cc-by-nc-nd Logo
Document Type: 
Working Paper

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