HONG-KONG HOUSING MARKETS - OVERVIEW, TENURE CHOICE, AND HOUSING DEMAND

This paper presents an overview of housing markets and a cross-section al analysis of housing demand in Hong Kong. Disturbances from politica l events have produced price upheavals in property prices; long-term i nflation and low interest rates provide a strong stimulus for a sustai ned price surge in the housing market. Household income seems to have relatively little bearing on recent development in the market, especia lly when demand for housing has become more investment-oriented. With the data from the 1991 Population Census of Hong Kong, we find in the cross-section study that permanent and transitory incomes, rather than current income, provide better estimates in the tenure choice equatio n. The results also indicate that family size and the number of elderl y persons affects ownership. Renter expenditure and tenure choice deci sions are linked by using the two-stage estimation procedure of Lee an d Trost (1978). No correlation was found between renter expenditure an d tenure choice. Further, the two-stage approach does not seem to be s uperior to the OLS approach in the estimation of the rental expenditur e equations.