Author: Yu, Ka Hung
Title: The impact of government housing policy and development controls on the dynamics of Hong Kong's residential property market
Degree: Ph.D.
Year: 2018
Subject: Hong Kong Polytechnic University -- Dissertations
Housing policy -- China -- Hong Kong
Real property -- Prices -- China -- Hong Kong
Pages: viii, 355 pages : color illustrations
Language: English
Abstract: In view of Hong Kong's exorbitant housing price/rental levels in recent years, this research study investigates this issue from a variety of perspectives, namely 1) the major determinants of Hong Kong's housing prices and rents; 2) housing construction decisions by developers; and 3) the Town Planning Board's planning control decisions on the development of different types of housing, against the backdrop of the Linked Exchange Rate System (between Hong Kong Dollar and the U.S. Dollar) in an increasingly globalized world. The findings first show that a higher housing supply only manages to bring about a moderate short-run negative impact on housing prices and rents. Rather, the soaring property prices and rents faced by Hong Kong residents, in the last few years, have been demand-driven, in that housing in Hong Kong has become costlier than ever due to U.S. unconventional monetary policy measures (launched in the aftermath of the 2008 Global Financial Crisis) via the Linked Exchange Rate System as well as a bullish stock market (which has been increasingly susceptible to global conditions). The former, by causing an unprecedented boost in Hong Kong's money supply, provides prospective homeowners with easy access to very low-cost mortgages, thus stimulating housing demand. Meanwhile, the latter, which is found to have been increasingly susceptible to global stock market/economic movements since the introduction of unconventional monetary policies, generates capital gains for many Hong Kong people to at least afford the downpayment necessary for home purchase. The findings also show that, even when the government releases more land sites for sale (i.e. higher total supply of residential land), this does not necessarily trigger more housing constructions. However, more housing constructions are triggered when a higher proportion of the total land supply comes from land exchange. Besides, property developers also tend to postpone housing construction, should they expect property prices and construction cost to grow further or should the actual interest rate rise. By contrast, only when property price and interest rate get more volatile that developers would initiate construction sooner.
However, delays in housing development are not solely caused by developers. The Town Planning Board is found to reject applications for housing development in R(A) zone and in CDA zone more often (and small house applications in Greenbelt zone), despite soaring property price (which has essentially been driven by non-domestic factors). Also, the TPB's decisions are generally not found to be in line with the government's housing policy directions to supply more housing units through re-zoning non-residential land sites for housing development. The TPB's irresponsiveness towards the government's housing policy priority, along with its hardened stance towards permitting housing development in light of soaring housing price, results in repeated applications by developers, hence a lengthier planning control process. This, in turn, could cause further delays in housing development as the financial viability of development projects changes over time.
Access: open access

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