Building a House Prices Forecasting Model in Hong Kong

Publisher:
Australian Institute of Quantity Surveyors
Publication Type:
Journal Article
Citation:
The Australian Journal of Construction Economics and Building, 2002, 2 (2), pp. 57 - 70
Issue Date:
2002-01
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The purpose of building a house prices forecasting model is to estimate the impact of housing demand and housing supply in Hong Kong. The property market plays a very important role in the economy of Hong Kong. The real estate sector contributed approximately 10.2 per cent of GOP in 1996 (Hong Kong Government, 1998). More than 45 per cent of all bank loans, over HK$500 billion as at the end of 1997, were directly tied to properties (Hong Kong Government, 1998). Income from land auctions, rates and stamp duties accounted for approximately 24 per cent of total Government revenue in 1997/1998 (Chan, et al., 2001). Property and construction company stocks contributed 25 per cent to Hong Kong's stock market capitalization as well as to over 60 per cent of capital investment expenditures (Newell and Chau, 1996). Smooth changes in house prices thus help to maintain stable economic growth in Hong Kong. To achieve a stable house price level, housing supply must match the demand for houses. However, house prices have at ti mes been very volatile as a result of mismatched housing demand and supply in Hong Kong.
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