Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/230486
Authors: 
Leung, Charles Ka Yui
Ng, Joe Cho Yiu
Tang, Edward Chi Ho
Year of Publication: 
2020
Series/Report no.: 
ISER Discussion Paper No. 1081
Abstract: 
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, longevity continues 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.
Subjects: 
housing demand
migration
structural break
time series decomposition
wage index andhousehold income
JEL: 
E20
J01
R00
Document Type: 
Working Paper

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