The United States released a consultancy company study 10 Feb 2011, reported that Hong Kong is “ the most expensive residential belongings monetary value in the universe ” . Surely, the lodging monetary value is lifting quickly in recent old ages, but the intelligence make me experience astonish and interested to find the factor affect the residential lodging monetary value in Hong Kong.
Introduction
This paper is tried to happen out the relationship between Housing Demand and the Housing monetary value in the Hong Kong during 2000 to 2010. We focus on look into how the investing demand and infinite demand affect lodging monetary value. As we know house monetary value are affect by many of demand factors, this survey we focus in examines the function of Income, rising prices rate, mortgage involvement rate in the investing facet, birth rate and matrimony statistics in infinite demand facet to finding lodging monetary value. We use a arrested development theoretical account to explicate the causal relationship between lodging monetary values and concentrating variables.
The paper is construction as follows: Section 2 literature reappraisal. Section 3 nowadayss a model for analysis house monetary value, and these focusing variables. Section 4 describes the economic methodological analysis ( arrested development theoretical account ) used in the survey. Section 5 presents the informations and chart. Section 6 analysis the consequence of the chart. Section 7 indicate the restriction of the survey. Section 8 do the decision. Finally, list out the informations used in this survey in mention.
Literature
There are several of academic literatures review over the subject of Housing monetary value, we find out some remark on the literature are relevant to our survey.
Tom ( 2003 ) claimed that the consumer market and investor market influence house monetary value, by and large the house monetary value depends upon the degree of demand for lodging greatly and either investor or consumer enter the lodging market may depend on consider incomes and borrowing rate factor.
Ioannides, Yannis, & A ; Rosenthal, Stuart ( 1994 ) individually identify investing demand and ingestion demand for lodging, arrested development consequence show that the investing demand is sensitive to wealth and income than ingestion demand, but less sensitive to demographic variable about age, eduation amnd household size than ingestion. Test consequences strongly indicate the owner-occupier abode determined chiefly by ingestion demand, non investing.
Christopher and Hubbard ( 2007 ) See the criterion Gordon Growth Model, stated the theoretical account implies a convex relationship between house monetary values and involvement rates ; if the involvement rate in lower degree, the alterations of house monetary values is greater snap. The Goldman Sachs study ( 1 ) found a strong positive correlativity between income growing and house monetary value grasp across states.
Tse ( 1996b ) express that demand of flats are strongly affected by bad activity. Therefore, the growth of lodging demand is of course when houses are viewed as good investing assets Tse ( 1996b ) remark in early 1990s rising prices during in Hong Kong, residential belongings was viewed as favourable investings to fudge against rising prices, purchasing house is viewed as a method of repairing the degree of future lodging costs. However, Tse ( 1996a ) besides indicate every inflationary addition in involvement rates on belongings values, the negative impact of rising prices on house monetary values will non be offset by positive. Although people borrow heavy, they tend to purchase rental belongingss for investings. So long as belongings monetary values and rewards kept lifting, householders would go on to maintain investing to merchandising up in the hope, they think they could sell out at a net income finally.
Barot ( 2001 ) indicates that the volatility in both house monetary values and lodging investing must see both the demand and supply sides in conformity with common theoretical constructs and experience of how the lodging market works. Besides, mentioned that income continues to turn in front of house monetary values, a major resurgence in the lodging market because of cut downing of mortgage involvement rates.
1See “ Global Economics Weekly, ” Issue No: 07/32, September 26, 2007.
Methodology
We decide the Research Question and based the inquiry to roll up the information and do evaluate fluctuations to the informations and aids with mention point to analysis these informations.
Research Question
Did people enable to pass more on purchasing house if income rise?
Is the diminution of the mortgage rate cause of lifting the house monetary value?
Is the rising prices lucifer to the house monetary value rising prices rate?
What is the average family? Will it impact purchasing house behaviour?
Does birth rate figure affect lodging demand and monetary value?
Is the figure of matrimony statistics affect lodging demand and monetary value?
Data Collection
We would roll up the information of lodging monetary value growing rate, mortgage involvement rate, rising prices rate and Median family from twelvemonth of 2000 to 2010 and birth rate and matrimony from 1961 to 2010. These informations will utilize a tendency chart to detect tendencies over a specified period. Data would chiefly roll up in the Web Site of Rating and Valuation Department, Census and Statistics Department, Trading Economic and HK Monetary Authority.
Housing Price – Property monetary values is a contemplation of the economic system, it chiefly impact by economic
factors but besides affect by a host of other factors.
Mortgage involvement rate – Interest rates affect the cost of paying for a mortgage. Interest rates level really of import as mortgage refunds are biggest portion of a householder ‘s monthly disbursement normally.
Inflation rate- Inflation means that the rise in domestic monetary value degree, lodging monetary value is a sort of trade good, it would impact by the rising prices
Median Household – on the local lodging capacity, the higher income degrees, lodging more sensible monetary value degrees, the stronger the lodging capacity, the larger the demand for lodging
Birth rate – Birth rate will increase the population, lift the demand of lodging.
Marriage statistics – Housing population ( household formation rate ) the increasing in families formation rate on behalf of the greater demand for lodging.
After that, we would utilize a arrested development theoretical account to foretell House monetary value ( HP ) of residential belongings market, utilizing five explanatory variable: Median Household ( MH ) , mortgage rate ( MR ) , rising prices rate ( IR ) , Birth rate ( BR ) , Marriage statistics ( MS ) . We would divide into two equation, there are
Investing Demand: HP= a + B ( MH ) + degree Celsius ( MR ) + vitamin D ( IR )
Space Demand: HP=a + B ( BR ) + degree Celsius ( MS )
Dependent variable – Housing Monetary value
Independent variable – Investing demand ( average family, mortgage involvement rate, rising prices rate )
Space Demand ( Birth Rate, Marriage statistics )
Restriction
House monetary value is a complex job, In add-on to above factor, a batch of factor would act upon it, for illustration nest eggs rate, wealth accretion, authorities administrative steps, investors in world-wide etc. even though psychological will impact it. Therefore, We are unable to analysis these factor and inability to guarantee the relationship between mutable lodging markets. Because of the restriction, ( a ) in the above equation would stand for these other factor to allow the consequence become sensible.
