Privatization of public housing : did it cause the 1998 recession in Hong Kong?
Document Type
Journal article
Source Publication
Contemporary Economic Policy
Publication Date
4-1-2006
Volume
24
Issue
2
First Page
262
Last Page
273
Publisher
Wiley-Blackwell Publishing, Inc.
Abstract
This paper finds evidence that a public housing privatization program produced adverse effects on housing transactions and the economy in Hong Kong. A Granger causality test shows that house prices drive housing transactions, lending support to the hypothesis that an increase or decrease in prices at the lower end of the market sends ripple effects throughout the whole market. A scheme announced in December 1997, offering tenants an opportunity to buy their units at deeply discounted prices, reduced public housing tenants’ bids for private homes and thus the equity of homeowners. The hypothesis is supported by evidence indicating a structural break in the housing price relationship at the time the privatization program is introduced. Declines in housing prices further eroded employment and set off a vicious circle.
DOI
10.1093/cep/byj017
Print ISSN
10743529
E-ISSN
14657287
Publisher Statement
Copyright © Western Economic Association International 2005
Access to external full text or publisher's version may require subscription.
Full-text Version
Publisher’s Version
Language
English
Recommended Citation
Ho, L. S., & Wong, W. C. G. (2006). Privatization of public housing: Did it cause the 1998 recession in Hong Kong? Contemporary Economic Policy, 24(2), 262-273. doi: 10.1093/cep/byj017