This paper presents evidence, based on the recent Hong Kong experience, for the existence of a “housing ladder effect.” An increase of housing equity at the bottom of the ladder tends to translate into a trading up activity that will both increase housing market turnover and buoy up the entire housing market. Based on a natural experiment through the introduction of a public housing privatization scheme, this papers presents evidence supporting this story using a logit model and a price-volume causality test.
Ho, L. S., & Wong, W. C. G. (2008). The housing ladder and Hong Kong housing market's boom and bust cycle (CPPS Working Paper Series No.190). Retrieved from Lingnan University website: http://commons.ln.edu.hk/cppswp/89/