Real Estate Market Analysis

Kwok-Sang (Maurice) Tse 謝國生

The University of Hong Kong
ktse@hku.hk

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Demonstrator

gtsangwk@hku.hk

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Contents

•Stock Market, Property Market, GDP,

Consumption.

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Introduction

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Hong Kong Stock Market

Industry Classification
• Energy • Utilities
• Materials • Financials
• Industrials • Properties & Construction
• Consumer Goods • Information Technology
• Consumer Services • Conglomerates
• Telecommunications
HKEX Fact Book

• What about the portfolio weights?

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 Market Capitalization Trend by
Hang Seng Industry Classification 2006-2015
Industry Class 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Energy 6.1% 7.4% 6.9% 7.3% 8.1% 7.8% 7.6% 6.2% 4.7% 3.5%
Materials 2.2% 2.9% 1.8% 3.0% 3.3% 2.6% 2.5% 2.0% 2.1% 1.8%
Industrials 1.0% 1.6% 1.3% 1.5% 2.2% 1.6% 1.8% 3.6% 4.2% 4.7%
Cons Goods 5.9% 6.8% 6.5% 9.3% 10.6% 11.5% 10.9% 11.7% 11.1% 11.4%
Cons Services 6.9% 7.2% 5.8% 6.7% 8.1% 9.2% 9.1% 10.6% 7.9% 6.3%
Telecom 13.8% 16.4% 18.3% 10.2% 9.3% 11.9% 10.5% 8.7% 9.4% 9.2%
Utilities 3.5% 3.0% 4.2% 3.6% 3.4% 4.3% 4.9% 5.4% 6.0% 6.0%
Financials 39.6% 31.2% 34.8% 34.5% 32.9% 30.5% 30.7% 29.0% 30.0% 29.4%
Properties 11.5% 14.2% 12.4% 13.9% 12.6% 11.6% 15.2% 13.5% 13.9% 14.4%
Info Tech 3.0% 3.2% 2.4% 4.7% 4.0% 3.7% 3.8% 6.0% 6.5% 8.6%
Conglomerates 6.4% 6.0% 5.5% 5.4% 5.6% 5.3% 3.1% 3.3% 4.2% 4.7%
Equity Total 100% 100% 100% 100% 100% 100% 100% 100% 100% 100%

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 Market Capitalization Trend by Hang Seng
Industry Classification 2010-2013
Market Capitalization by Industry
1 Jan 2010 -- 31 Dec 2013
35% 30%
30%
25%
20%
15% 13%
11%
8% 9%
10% 6% 7%
4% 5%
5% 3% 3%
0%

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 Market Capitalization Trend by
Hang Seng Industry Classification 2006-2015
45.0%
39.6%
40.0% 34.8% 34.5% 32.9%
35.0% 31.2% 30.5% 30.7% 30.0% 29.4%
29.0%
30.0%
25.0%
20.0% 15.2%
14.2% 12.4% 13.9% 12.6% 13.5% 13.9% 14.4%
15.0% 11.5% 11.6%
10.0%
5.0%
0.0%
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Energy Materials Industrials

Consumer Goods Consumer Services Telecommunications
Utilities Financials Properties & Construction
Infomration Technology Conglomerates

Major Sectors in Hong Kong 2015:

1. Financials (29.4%)
2. Telecommunications (9.2%)
3. Properties & Construction (14.4%)
4. Consumer Goods (11.4%)
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Hang Seng Index and Hang Seng Sub-Indices

HS Index Finance Properties Com&Ind Utilities

HS Index 1 0.937 0.846 0.952 0.623
Finance 1 0.778 0.849 0.529
Properties 1 0.783 0.552
Com&Ind 1 0.593
Utilities 1
Beta 1.0000 1.0248 1.0024 1.0029 0.4305
Year HS Index Finance Properties Com&Ind Utilities
2016 1 0.971 0.845 0.961 0.769
2015 1 0.965 0.832 0.962 0.668
2014 1 0.933 0.796 0.935 0.688
2013 1 0.969 0.829 0.932 0.624
2012 1 0.919 0.758 0.921 0.511
2011 1 0.894 0.940 0.977 0.527
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 Stock Market, Property Price and Rental
R(HSI) R(Price) R(Rental)
R(HSI) 1 0.47 0.38
R(Price) 1 0.84
R(Rental) 1
80.0% Anti-speculative measures
1995 Buyer’s
60.0% Stamp Duty
Handover 1997 Recovery 2004 (BSD) 15%
40.0% 27Oct2012

20.0%

0.0%

-20.0%
SARS 2003 Special
-40.0% Ad valorem
Stamp Duty
Stamp Duty
(SSD)
-60.0% Recession 1997-2002 20Nov2010
(AVD)
5Nov2016
-80.0% Asia Financial Crisis 1997-1999 Global Financial Crisis 2008
-100.0%
May-02

May-07
Mar-08
Jul-01

Mar-03

Jul-06
Sep-00
Nov-94

Jan-04
Nov-04
Sep-05
Jan-94

Sep-95

May-97
Mar-98
Jan-99
Nov-99

Jan-09
Nov-09

May-12

Jul-16
Jul-96

Sep-10
Jul-11

Mar-13
Jan-14
Nov-14
Sep-15
R(HSI)-YoY R(Price)-YoY k s tse 10
 Stock and Property Market Performance

0.2 R(HS Index) R(Price) R(Rental)

R(HS Index)
0.15 2008 -65.9% -11.8% -11.3%
R(Price)
2009 41.9% 25.0% 11.6%
0.1 R(Rental)
0.05
0
-0.05
-0.1
-0.15
-0.2 Hong Kong Monetary Base (HKD billion)
-0.25 2005 2006 2007 2008 2009
284 296 321 507 1011
-0.3
Sep-05 Mar-06 Oct-06 Apr-07 Nov-07 Jun-08 Dec-08 Jul-09 Jan-10 Aug-10
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 Real GDP and Property Price Indices
GDP Small & M Large
GDP 1 0.63 0.74
Small & M 1 0.94

50.0%
Property Price Change and GDP Growth (YoY%) 15.00%

40.0%
Quarterly Property Price Change yoy％

10.00%

Quarterly Real GDP Growth YoY％

30.0%

20.0%
5.00%

10.0%

0.00%
0.0%
06Q1
01Q1

03Q3

02Q1

02Q3

03Q1

03Q3

04Q1

04Q3

05Q1

05Q3

06Q3

07Q1

07Q3

08Q1

08Q3

09Q1

09Q3

10Q1

10Q3

11Q1

11Q3
-10.0%
-5.00%

-20.0%
Quarterly GDP Change YoY% Small and Medium Sized Properties

-30.0% Large Properties (> 100 sqm) -10.00%

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Consumer Price Index

In 2008-2009, inflationary pressure was building up

because of the weak US dollar and the booming
property market leading to higher rental rates.

Question: Is Real Estate Real ? Does real estate

provide a good hedge against inflation ?

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Consumer Price Index
Consumer Price Index (yoy %Change): 2000-2015
+15.0
All Food Housing Clothing and Footwear Transport

+10.0

+5.0

0.0

-5.0

-10.0

-15.0
2000 2002 2004 2006 2008 2010 2012 2014 2016

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Consumer Price Index

Question: Is Real Estate Real ? Does real estate

investment provide a good hedge against inflation ?

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Is Residential Real Estate Real
Examine the Return on Price and Rent versus Inflation Rate
15.00%
monthly return on Return on Price Return on Rent CPI (%)
residential property 10.00%
price and rent
5.00%
versus inflation rate.
0.00%

-5.00%

-10.00%
Does real estate
investment provide a -15.00%
good hedge against Feb-93 Jul-98 Jan-04 Jul-09 Dec-14
inflation ?
Return on Price Return on Rent CPI (%)
Monthly Average 0.50% 0.24% 0.19%
Monthly Stdev 2.59% 1.51% 0.37%

Correlation Return on Price Return on Rent CPI (%)

Return on Price 1.00 0.46 0.09
Return on Rent 1.00 0.27
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Is Residential Real Estate Real
Examine the Total Return of Residential and Inflation Rate
monthly return on Total Return CPI (%)
residential property 15.00%
price and rent 10.00%
versus inflation rate.
5.00%

0.00%

-5.00%

-10.00%
Does real estate
-15.00%
investment provide a
good hedge against -20.00%
Feb-93 Jul-98 Jan-04 Jul-09 Dec-14
inflation ?
Return on Price Return on Rent CPI (%)
Monthly Average 0.50% 0.24% 0.19%
Monthly Stdev 2.59% 1.51% 0.37%

Correlation Return on Price Return on Rent CPI (%)

Return on Price 1.00 0.46 0.09
Return on Rent 1.00 0.27
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Q&As

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Contents
• Introduction
• Stock Market, Property Market, GDP, Consumption.
•Characteristics of Hong Kong Economy
• Real Estate Market Activities and Bubbles
• Supply and Demand Conditions
• Affordability Issues
• Residential Price Performance

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Capital Inflows around the Financial Crisis
Monetary Base
1200
Hong Kong Monetary Authority (HK$ Billions)
1086 1090
1051
1011
1000
+506
800

600 +186
507

400 321
284 296

200

0
2005 2006 2007 2008 2009 2010 2011 2012

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 Capital Inflows around the Financial Crisis
HK Monetary Base (HK$ billion)
Source: Hong Kong Monetary Authority
1800
1593 1636
1600
1400 1346
1219 1256
1200
1011 1040 1073
1000
800
600 507
321
400 247 293 295 284 296
200
0
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

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 Low Local Interest Rates
Sep-09 Oct-09 Nov-09 Dec-09 Jan-10 Feb-10 Mar-10
0.14 0.08 0.05 0.08 0.08 0.07 0.10
1-Month HIBOR (% p.a.)
8.00

7.00

6.00

5.00

4.00

3.00

2.00

1.00

0.00
Jan-99 May-00 Sep-01 Feb-03 Jun-04 Nov-05 Mar-07 Aug-08 Dec-09 Apr-11

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Low Local Interest Rates
9.00% Best Lending Rate p.a. 3-mo HIBOR
3-month LIBOR Fed Fund Target Rate
8.00%
7.00%
6.00%
5.00%
4.00%
3.00%
2.00%
1.00%
0.00%
07Q1
07Q2
07Q3
07Q4
08Q1
08Q2
08Q3
08Q4
09Q1

09Q3
09Q4
10Q1
10Q2
10Q3
10Q4
11Q1
11Q2
11Q3
11Q4
09Q2

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 Fund Inflows and Potential Risks
• Causes of fund inflows

• Potential Risks

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Contents
• Introduction
• Stock Market, Property Market, GDP, Consumption.
• Characteristics of Hong Kong Economy
•Real Estate Market Activities and Bubbles
• Supply and Demand Conditions
• Affordability Issues
• Residential Price Performance

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Real Estate Market Activities

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 Hong Kong Property Market during the
Global Financial Crisis
Real Estate Peak Trough Correction since Rebound from the
Indicators Date Date peaking trough (Feb 2010)
Luxury residential prices Jun 08 Dec 08 -33.3% +46.5%
Luxury residential rents Jul 08 Apr 09 -32.9% +22.4%
Mass residential prices Mar 08 Dec 08 -23.3% +37.4%
Mass residential rents Jul 08 Mar 09 -24.1% +27.3%
Grade-A office prices Feb 08 Feb 09 -48.2% +67.7%
Grade-A office rents May 08 Aug 09 -41.6% +11.1%
Retail prices Jun 08 Jan 09 -21.1% +39.6% (Jan)
Retail rents Jul 08 Apr 09 -9.4% +11.7% (Jan)

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Rental Yields of Properties
Year Mass Luxury Grade-A Retail Industrial
Residential Residential Office
Jul 4.8 3.5 4.6 4.9 7.2
2006 Dec 4.5 3.5 4.8 4.9 7.0
Jul 4.4 3.5 4.2 4.5 6.2
2007 Dec 4.1 3.1 3.7 4.3 5.8
Jul 4.3 3.4 4.2 4.2 5.6
2008 Dec 4.1 3.4 5.1 4.7 6.2
Jul 3.5 2.6 3.6 4.0 5.6
2009 Dec 3.6 2.7 3.4 3.8 5.2
2010 Jan 3.6 2.7 3.2 3.7 5.1

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Rental Yields of Properties
Mass Residential Luxury Residential Grade-A Office Retail Industrial
8.0
7.5
7.0
6.5
6.0
5.5
Rental Yields (%)

5.0
4.5
4.0
3.5
3.0
2.5
2.0
1.5
1.0
0.5
0.0
Jul-06 Dec-06 Jun-07 Dec-07 Jun-08 Dec-08 Jun-09 Dec-09 Jun-10

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 Visitor Arrival Growth

Year on Year 2008 2009

% Change Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
Mainland
9.9% 12.6% 9.4% 4.4% 12.6% -4.1% 0.1% 16.6%
Visitors
Non-Mainland
10.0% 2.5% -4.7% -6.9% -12.6% -14.6% -4.2% -0.9%
Visitors
Total Visitor
10.0% 7.7% 3.4% -0.9% 1.8% -8.9% -1.6% 9.0%
Arrivals

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 Mainland Visitors and Private Retail
Retail Rent, Price and Mainland Visitors
6 000 000 700
573.6
536.7 600
5 000 000

Price and Rent Index

Mainland Visitors

500
4 000 000 305.3
400
3 000 000
300
2 000 000
200

1 000 000 100

128.0 182.5 182.4
0 0
Jan-11 Jul-11 Feb-12 Aug-12 Mar-13 Oct-13 Apr-14 Nov-14 May-15 Dec-15 Jun-16 Jan-17
Mainland Visitors Retail Rent Index Retail Price Index

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 Visitor Arrival Growth
• Correlation of yoy Change in monthly Retail Rent and Price
Index with yoy% Change in monthly Visitor by Region
(Jan 2011 to Mar 2017)

Correlation Mainland Americas Europe SE Asia N Asia Total

%CHG Rent 0.70 -0.43 -0.03 -0.19 -0.44 0.67
%CHG Price 0.65 -0.51 -0.02 -0.23 -0.56 0.60
Mainland -0.51 -0.27 -0.46 -0.25 0.99

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 Hong Kong Property Market Rental Yields
Yield % Residential Class A Residential Class E
Office A Flatted factories
16
10-Yr Exchange Fund Notes
14 Hong Kong Monetary Base (HKD billion)
2005 2006 2007 2008 2009
12 284 296 321 507 1011
10

0
Jan-99 Feb-00 Mar-01 Apr-02 May-03 Jun-04 Jul-05 Sep-06 Oct-07 Nov-08 Dec-09

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 Deals over HKD 100M (2006-2009)
Residential Office Retail Industrial Hotel
Total Total Total Total Total
No. of Value No. of Value No. of Value No. of Value No. of Value
Year
Deals (HKD Deals (HKD Deals (HKD Deals (HKD Deals (HKD
Bn) Bn) Bn) Bn) Bn)
2006 49 10.22 55 24.20 16 6.73 21 6.72 3 0.77
2007 102 25.06 56 13.17 27 7.48 29 7.72 4 1.55
2008 119 36.73 68 18.23 40 7.34 16 4.62 3 0.75
2009 61 15.71 43 10.61 46 11.47 19 4.88 1 0.15

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 Hong Kong Monetary Base (HKD billion)
Transaction Volume 2005 2006 2007 2008 2009
284 296 321 507 1011
12000
10000 Primary Sales
8000 Secondary Sales
6000
4000
2000
0

10.00%
GDP Growth
5.00%

0.00%

-5.00%

-10.00%

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 Hong Kong Monetary Base (HKD billion)
Transaction Volume 2005 2006 2007 2008 2009
284 296 321 507 1011
40000
Primary Sales
30000 Secondary Sales
20000

10000

10.00%
GDP Growth
5.00%

0.00%

-5.00%

-10.00%

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 Vacancy Rate and GDP Growth
25.0% 25.0%

20.0% 20.0%

15.0% 15.0%

10.0% 10.0%

5.0% 5.0%

0.0% 0.0%

-5.0% -5.0%
1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015 2017
%GDPGrowth Vacancy A Vacancy C Vacancy E

Correlation Class A Class C Class E

GDP Growth -0.48 -0.61 -0.47

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 Vacancy Rate and GDP Growth
%𝑉𝑅 = 𝛽0 + 𝛽1 %𝐺𝐷𝑃𝐺𝑅 + 𝜀
Regression Results Class A Class C Class E
0.0332 0.0752 0.1013
𝛽0
(18.95) (19.02) (13.12)
-0.0533 -0.1690 -0.2338
𝛽1
(-3.03) (-4.28) (-3.03)
25.0% 25.0%

20.0% 20.0%

15.0% 15.0%

10.0% 10.0%

5.0% 5.0%

0.0% 0.0%

-5.0% -5.0%
1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015 2017
%GDPGrowth Vacancyk sAtse Vacancy C Vacancy E 38
 Price and Rental Index Trend
Residential property prices and rents have returned to pre-crisis levels (with prices
and rents even approaching to more than 80% of the 1997 level).
200.0
1997 Levels
180.0
160.0
140.0 Pre-Crisis Levels
120.0
100.0
80.0
60.0
40.0 Price Index (ALL)
20.0
Rental Index (ALL)
0.0
Jan-93 Aug-94 Apr-96 Dec-97 Jul-99 Mar-01 Nov-02 Jul-04 Feb-06 Oct-07 Jun-09

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 Price and Rental Index Trend
Residential property prices and rents have returned to pre-crisis levels (with prices
and rents even approaching to more than 80% of the 1997 level).
200.0
1997 Levels
180.0
160.0
140.0 Pre-Crisis Levels
120.0
100.0 REAL ESTATE BUBBLE
FORMED ??
80.0
60.0
40.0 Price Index (ALL)
20.0
Rental Index (ALL)
0.0
Jan-93 Aug-94 Apr-96 Dec-97 Jul-99 Mar-01 Nov-02 Jul-04 Feb-06 Oct-07 Jun-09

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 Class A: 40 sqm
Class B: 40-69.9 sqm
Price Index Trend Class C: 70-99.9 sqm
Class D: 100-159.9 sqm
Class E: 160 sqm
Private Domestic Price Index
250.0
(1999 Price)

200.0
1997 Levels
Post-Crisis Levels

150.0

100.0

50.0 Class A, B, C REAL ESTATE BUBBLE

FORMED ??
Class D, E
0.0
98Q3

05Q1
93Q1
93Q3
94Q1
94Q3
95Q1
95Q3
96Q1
96Q3
97Q1
97Q3
98Q1

99Q1
99Q3
00Q1
00Q3
01Q1
01Q3
02Q1
02Q3
03Q1
03Q3
04Q1
04Q3

05Q3
06Q1
06Q3
07Q1
07Q3
08Q1
08Q3
09Q1
09Q3
10Q1
10Q3
11Q1
11Q3
12Q1
12Q3
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 REAL ESTATE BUBBLE
Rental Index Trend FORMED ??

Private Domestic Rental Index

200.0
(1999 Price)
190.0
180.0
170.0
160.0
1997 Levels Post-Crisis Levels
150.0
140.0
130.0
120.0
110.0
100.0
90.0
80.0
70.0
60.0
Class A, B, C Class D, E
50.0

07Q3

11Q1
93Q1
93Q3
94Q1
94Q3
95Q1
95Q3
96Q1
96Q3
97Q1
97Q3
98Q1
98Q3
99Q1
99Q3
00Q1
00Q3
01Q1
01Q3
02Q1
02Q3
03Q1
03Q3
04Q1
04Q3
05Q1
05Q3
06Q1
06Q3
07Q1

08Q1
08Q3
09Q1
09Q3
10Q1
10Q3

11Q3
12Q1
12Q3
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 Post-Crisis Price and Rental Trend
Price and Rental Index (All Classes): 1999 Price Level
350.0
REAL ESTATE BUBBLE
300.0 FORMED ??
250.0

200.0 1997 Levels

150.0 Post-Crisis Levels

100.0

50.0

0.0
96Q4
94Q3

96Q1

99Q1
99Q4

02Q1
02Q4

15Q3
00Q3

03Q3

07Q2

11Q1
11Q4

16Q2
12Q3
13Q2
14Q1
14Q4
08Q1
08Q4
93Q1
93Q4

01Q2

05Q1
05Q4
95Q2

97Q3
98Q2

04Q2

06Q3

09Q3
10Q2
Price Index (All) Rental Index (All)

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Property Market Trend
Real Property Prices
100
90
80
70

Real New 60
50 Transaction Volume
Mortgages 40
30
20
10
0

Confirmor
Income Leverage
Transactions

Buy Rent Gap

Q2-Q3 1997 Q2 2002 Q4 2008 Jul-Aug 2009
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 Property Market Trend Analysis

Indicator Change (+/-) Factors

Income Leverage of Low interest rate
Small (+)
Households Interest rate can increase
Low interest rate
Buy-Rent Gap Small (+)
Interest rate can increase
3.75% Stamp duty on second-hand
Confirmor Transactions Low
properties over $3 million.
Low interest rate
New Mortgages BIG (+)
Interest rate can increase
Real Property Prices BIG (+) Liquidity
Transaction Volume BIG (+) Liquidity
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 Wealth Effect of Real Estate on Consumption
Effect on Consumption Property Price Volatility（%）
Growth (%) -5% -10% -15% -20% -25%

-5% -0.28 -0.40 -0.53 -0.65 -0.78

-10% -0.43 -0.55 -0.68 -0.80 -0.93
Stock Price
-15% -0.58 -0.70 -0.83 -0.95 -1.08
Volatility（%）
-20% -0.73 -0.85 -0.98 -1.10 -1.23
-25% -0.88 -1.00 -1.13 -1.25 -1.38
European Central Bank Working Paper No. 1000, January 2009

%DConsumption = b0 + b1 ´%DStockPrice + b2 ´%DPropertyPrice + e

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 Wealth Effect of Real Estate on Consumption
Effect on Consumption Property Price Volatility（%）
Growth (%) -5% -10% -15% -20% -25%

-5% -0.28 -0.40 -0.53 -0.65 -0.78

-10% -0.43 -0.55 -0.68 -0.80 -0.93
Stock Price
-15% -0.58 -0.70 -0.83 -0.95 -1.08
Volatility（%）
-20% -0.73 -0.85 -0.98 -1.10 -1.23
-25% -0.88 -1.00 -1.13 -1.25 -1.38
Hong Kong data: Quarterly January 1999 to January 2009

%∆𝐶𝑜𝑛𝑠𝑢𝑚𝑝𝑡𝑖𝑜𝑛 = 𝛽0 + 𝛽1 × %𝑆𝑡𝑜𝑐𝑘𝑃𝑟𝑖𝑐𝑒 + 𝛽2 × %∆𝑃𝑟𝑜𝑝𝑒𝑟𝑡𝑦𝑃𝑟𝑖𝑐𝑒 + 𝜀

• Threat over the intermediate-run:
𝑌 = 𝐶 𝑌 − 𝑇𝑎𝑥, 𝐶𝑜𝑛𝑓𝑖𝑑𝑒𝑛𝑐𝑒 + 𝐼 𝑌, 𝐶𝑜𝑛𝑓𝑖𝑑𝑒𝑛𝑐𝑒, 𝑖𝑟𝑒𝑎𝑙 + 𝑃𝑟𝑒𝑚𝑖𝑢𝑚

• Multiplier effect kicking in:

– The wealth effect could lead to decreasing Investment which in turn leads
to a fall in GDP. With income falling, consumption will continue to shrink
and so on… k s tse 47
Wealth Effect of Real Estate on Consumption

Consumption, Real Estate Price and Stock Market

120.0%
PCE Price Index HS
100.0%
80.0%
60.0%
40.0%
20.0%
0.0%
-20.0%
-40.0%
-60.0%
-80.0%
Mar-02

May-04
Jun-93

Oct-08
Apr-03
Oct-97

Jan-00

Dec-10
Mar-90

May-92

Sep-96

Sep-07

Nov-09
Feb-01

May-15
Apr-91

Jul-94
Aug-95

Apr-14
Dec-98

Jun-05
Aug-06

Jan-12
Feb-13
k s tse 48
 Wealth Effect of Real Estate on Consumption

%∆𝐶𝑜𝑛𝑠𝑢𝑚𝑝𝑡𝑖𝑜𝑛 = 𝛽0 + 𝛽1 × %∆𝐻𝑆𝐼 + 𝛽2 × %∆𝑃𝑟𝑜𝑝𝑃𝑟𝑖𝑐𝑒 + 𝜀

Regression Result Coefficients Standard Error t Stat
Intercept 𝛽0 0.0416 0.0054 7.64
Hang Seng Index return 𝛽1 0.0438 0.0182 2.41
Property Price Index return 𝛽2 0.2476 0.0258 9.60
Wealth Effect on Domestic Property Price
Consumption -5% -10.0% -15.0% -20.0% -25.0%
-5% 2.7% 1.5% 0.2% -1.0% -2.2%
Hang -10.0% 2.5% 1.2% 0.0% -1.2% -2.5%
Seng -15.0% 2.3% 1.0% -0.2% -1.4% -2.7%
Index -20.0% 2.0% 0.8% -0.4% -1.7% -2.9%
-25.0% 1.8% 0.6% -0.6% -1.9% -3.1%
k s tse 49
Contents
• Introduction
• Stock Market, Property Market, GDP, Consumption.
• Characteristics of Hong Kong Economy
• Real Estate Market Activities and Bubbles
•Supply and Demand Conditions
• Affordability Issues
• Residential Price Performance

k s tse 50
Demographic Changes and Future Housing Demand

• Demographic variables ??
k s tse 51
Demographic Changes and Future Housing Demand

• Demographic variables:

k s tse 52
Population & Demand for Property

Economic Factors
GDP Growth, Foreign Direct
Birth Investment, Interest Rates etc Death

Population
❖ Age Distribution: for
predicting HH formation
❖ HH Income Level
Immigration ❖ HH Head: male/female Emigration
❖ Life Style/Taste

k s tse 53
Statistics on Hong Kong Population and Vital Events

Age Sex 1996 2001 2006 2011 2013 2014 2015

Female 580.5 530.4 455.2 397.3 385.5 389.2 400.1
< 15
Male 623.6 568.1 484.0 426.2 411.6 415.2 428.0
Female 992.5 931.5 913.0 903.8 915.5 902.7 879.4
15-34
Male 1027.5 949.6 909.5 893.3 887.0 877.4 867.0
Female 1135.5 1342.3 1535.8 1676.6 1697.8 1713.1 1737.0
35-64
Male 1267.9 1412.1 1479.8 1540.7 1551.2 1550.5 1547.5
Female 358.5 405.4 458.9 503.0 545.2 568.3 595.8
> 65
Male 295.1 347.9 393.2 438.2 475.9 497.0 521.3
Total 6281.1 6487.3 6 629.4 6 779.1 6 869.7 6 913.4 6 976.1

What is the female-to-male ratio across the different age groups?

k s tse 54
Statistics: Hong Kong Population and Vital Events

Age 1996 2001 2006 2011 2013 2014 2015

< 15 19.2% 16.9% 14.2% 12.1% 11.6% 11.6% 11.9%
15-34 32.2% 29.0% 27.5% 26.5% 26.2% 25.7% 25.0%
35-64 38.3% 42.5% 45.5% 47.5% 47.3% 47.2% 47.1%
> 65 10.4% 11.6% 12.9% 13.9% 14.9% 15.4% 16.0%
Total 6281.1 6487.3 6629.4 6779.1 6869.7 6913.4 6976.1

◼ In 2015, the proportion of population of age 65 and above is

between 1/7 and 1/6.
◼ Projected proportion of 65 or older in 2030 ?? ¼ !!

k s tse 55
 Hong Kong Population and Vital Events

Population Growth: 2000 2005 2010 2015*

Natural increase (‘000)
16.9 15.4 43.5 13.9
(births less deaths)
Net movement (‘000)
41.6 14.3 20.6 44.3
(inflow less outflow)
Total (‘000) 58.5 29.7 64.1 58.2
Population Growth Rate (%) +0.9 +0.4 +0.9 +0.8
* End of 2015

k s tse 56
Hong Kong Population and Vital Events
2000 2005 2010 2015
Number of births (‘000) 54.1 57.1 88.6 59.9
Crude birth rate (per 1000 population) 8.1 8.4 12.5 8.2
Number of deaths (‘000) 33.8 38.8 42.2 46.1
Crude Death rate (per 1000 population) 5.1 5.7 6.0 6.3
Number of marriages (‘000) 30.9 43.0 52.6 51.6
Crude Marriage Rate (per 1000) 4.6 6.3 7.4 7.1
Median age at first marriage (years)
Male 30.0 31.2 31.2 31.2
Female 27.3 28.0 28.7 29.3

k s tse 57
 Hong Kong Population
Household Formation in Hong Kong 1981 5,150,000
1991 5,671,171
2001 6,712,500
All Marriages and First Marriage in Hong Kong 2011 7,074,729
70000
2013 7,184,194
60000
52600
50000 43286 39463 55274
42197 43081
37866
40000
41190 30879
36346 37581 35826 35703
30000
32033
27834
20000 23917

10000

0
1980 1985 1990 1995 2000 2005 2010
All Marriages First Marriage

81 85 90 95 96 97 98 99 2000 2005 2010

41190 36346 37581 32033 29397 30427 25064 24520 23917 27834 35826
k s tse 58
 Household Formation in Hong Kong

Marriages and Divorce

65000 65000
60000 60000
52600
55000 55000
50000 55274 50000
45000 45000
40000 40000
Marriages

Divorce
41190
35000 37581 35000
36346 35826 35703
30000 30000
32033
25000 27834 25000
20000 23917 20000
22271
15000 18167 15000
10000 5551 13427 14873 10000
4313
5000 2060 9404 5000
0 0
1980 1985 1990 1995 2000 2005 2010 2015
All Marriages First Marriage Divorce Decrees Granted

81 85 90 95 96 97 98 99 2000 2005 2010

2060 4313 5551 9404 8473 10492 13129 13408 13427 14873 18167
k s tse 59
 Household Formation in Hong Kong

Median Age at First Marriage 1981-2013

32.0 31.2 31.2 31.2
30.0 30.0
30.0
28.9

28.0 27.6 29.1

27.0 28.7
28.0
26.0 26.9 27.0
26.3

24.0 24.9
23.9
22.0

20.0
1980 1985 1990 1995 2000 2005 2010 2015
Median (M) Median (F)

k s tse 60
 Household Formation in Hong Kong
Number of Domestic Household 1982-2015 2480
2500 2325 150.0
Number of Domestic Households (000s)

2197
2037 130.0
2000
1783 This tells us how many

New Households (000s)

110.0
1559 new HHs are added to
1500 1418 81.5 the HH pool each year. 90.0
1312
70.0
56.6
1000 48.8
38.1 50.0
53.9
39.0 30.0
500
27.9
22.7 10.0
10.0
0 - 10.0
1980 1985 1990 1995 2000 2005 2010 2015

Number of domestic households ('000) Household Change

Source of figures: Hong Kong Census and Statistics

k s tse 61
 Household Formation in Hong Kong
Average Domestic Household Size 1982-2015
2600 3.9 2480
Number of Domestic Households

3.9
2400 3.7
3.7
2200 3.5

Average Household Size

3.4 3.5
2000 3.3
3.3
(000s)

1800
1600 3.1

1400 3.0 2.9

2.9 2.9
1200 1312 2.7
1000 2.5
1980 1985 1990 1995 2000 2005 2010 2015
Number of domestic households ('000) Average domestic household size

Number of Households (‘000)

1992 1996 1997 1999 2003 2004
1,632 1,840 1,922 2,012 2,206 2,257
(+1.7%) (+2.8%) (+4.4%) (+1.7) (+2.0) (+2.3)
Source of figures: Hong Kong Census and Statistics
k s tse 62
 The Trend of Household Size
PERCENTAGE OF HOUSEHOLD SIZE
100.0 3.9 3.3 3.3
10.9 8.2 5.8
16.0 9.6 9.0 8.0
90.0 22.5 11.9
30.5 29.2 13.5
80.0 34.9 14.3
15.0 21.2 19.5
22.7
70.0 14.3 23.4
13.9 24.0
12.0 22.7
60.0 12.5 20.6
17.2 24.4
23.2 24.3
50.0 13.5 14.7
12.8 21.3
19.4 20.1
40.0 15.4 17.3
14.2 13.5
12.1 26.5
30.0 24.1 25.2
19.2 21.8
14.7 12.9 14.1 15.4 16.3 18.4
20.0
10.0 15.2 14.7 14.8 15.2 14.8 14.9 15.7 16.5 17.1 18.3
14.3
0.0
1961 1971 1976 1981 1986 1991 1996 2001 2006 2011 2016
1-person 2-person 3-person 4-person 5-person 6 or above

What is the potential impact on the type of property demanded?

k s tse 63
 The Trend of Household Size

Year No. Households ONE TWO THREE FOUR FIVE 6 or above

1961 687,209 15.2 14.7 14.2 13.5 12.0 30.5
1971 857,008 14.7 12.9 12.1 12.8 12.5 34.9
1976 1,024,680 14.8 14.1 13.5 14.7 13.9 29.2
1981 1,244,738 15.2 15.4 15.4 17.2 14.3 22.5
1986 1,452,576 14.8 16.3 17.3 20.6 15.0 16.0
1991 1,582,215 14.3 18.4 19.4 22.7 14.3 10.9
1996 1,855,553 14.9 19.2 20.1 24.0 13.5 8.2
2001 2,053,412 15.7 21.8 21.3 23.4 11.9 5.8
2006 2,226,546 16.5 24.1 23.2 22.7 9.6 3.9
2011 2,368,796 17.1 25.2 24.3 21.2 9.0 3.3
2016 2,509,734 18.3 26.5 24.4 19.5 8.0 3.3

What is the potential impact on the type of property demanded?

k s tse 64
Statistics on Property and Construction
2003 2008 2013
Number % Number % Number %
Type
(‘000) (‘000) (‘000)
Public rental housing (1) 679 29.2 712 28.6 766 29.3
Subsidized sale flats (2) 395 16.9 397 16.0 391 14.9
Private Permanent housing (3) 1,258 53.9 1,377 55.4 1,458 55.7

Total 2332 100.0 2486 100.0 2616 100.0

Household Formation: Number of Households (000s)

2002 2007 2008 2009 2010 2011 2012
2,080.5 2,249.9 2,279.1 2,297.2 2,325.1 2,359.3 2,389.0
(+1.3%) (+0.8%) (+1.2%) (+1.4%) (1.25%)
Source of figures: Hong Kong Annual Digest of Statistics
• Does Hong Kong have enough units of shelter?
k s tse 65
 Supply and Demand for Shelter
Marriage Emigration
Household Pool
Divorce
Immigration Death

2002 2003 2004 2005 2006 2007 2008 2009

Number of HHs (000s) 2133.7 2114 2140.5 2197.1 2220.9 2247.1 2277.4 2300
Marriage 32070 35439 41376 43081 50328 47453 47331 47331
Divorce 12943 13829 15604 14873 17424 18403 17771 17771
New Arrivals (Male): One Way Permit 13363 13413 9981 15823 19871 11407 13218 13218
New Arrivals (Female): 1- Way Permit 31871 40094 28091 39283 34299 22458 28392 28392
New Households Formed 26000 33500 26500 56600 23800 26200 30300 22600
Property price decrease over 70% and stock
market perform bad, wealth effect is worse

Newly Completed Units: 2002 2003 2004 2005 2006 2007 2008 2009
Private Domestic 31052 26397 26036 17321 16579 10471 8776 14259
Public Rental 18290 15148 24682 17153 7192 13726 19050 19021

• Supply and Demand during 2005-2008 ?

k s tse 66
Supply and Demand for Shelter
Marriage Emigration
Household Pool
Divorce
Immigration Death

Ln(HH)= b0 + b1Ln(Marry)+ b2Ln(ReMarry)+ b3Ln(Divorce)+ b4 (NetFlowRate)+e

Results Estimated b t Stat
12.5573 37.87
implies not complete model
Intercept employment level, GDP prospect

%D(Marry) -0.0793 -2.82

and other factor also affect

%D(ReMarry) 0.1088 5.41

%D(Divorce) 0.1899 8.25
Netflow Rate -0.0004 -0.73
◼ The estimation was done using annual data from 1982 to 2013.
◼ Source of Data: Census and Statistics Department of HKSAR Gov
k s tse 67
Supply and Demand for Shelter

2011 2012 2013 2014 2015 2016 2017

Completions 8323 7727 7318 14813 9372 12512 16350
Take-up 10770 6680 6390 14210 8970 11040 14867
Vacancy 39994 38857 38209 36370 34826 35234 35314
% of total stock 3.9% 3.8% 3.7% 3.5% 3.3% 3.3% 3.3%

• Private and Domestic Supply of Large Units (> 100 sqm)

2011 2012 2013 2014 2015 2016 2017
Completions 1126 2422 936 906 1924 2083 1441
Take-up 630 870 1 670 2 310 1 560 841 2 087
Vacancy 7921 9140 8358 6893 7209 8423 7628
% of total stock 9.5% 10.7% 9.7% 7.9% 8.1% 9.2% 8.2%

k s tse 68
Supply and Demand for Shelter

Vacancy Rate
12.0%

10.0%

8.0%

6.0%

4.0%

2.0%

0.0%
1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016
Small & Medium Large
• Source: Hong Kong Property Review 2012
k s tse 69
Supply and Demand for Shelter

k s tse 70
Contents
• Introduction
• Stock Market, Property Market, GDP, Consumption.
• Characteristics of Hong Kong Economy
• Real Estate Market Activities and Bubbles
• Supply and Demand Conditions
•Affordability Issues
• Residential Price Performance

k s tse 71
HK Monthly Household Income
• What is the median household income in 1996?
Domestic Households by Monthly Household Income
Monthly HH Income (HK$) 1976 1981 1986 1991 1996
< 2000 662350 355437 141289 75552 55597
2000 – 3999 25680a 477995 368884 115236 68272
4000 – 5999 209281 340871 202511 75595
6000 – 7999 22580b 91622 209360 218388 105639
8000 – 9999 42742 125631 181846 136577
10000 – 14999 6390 39375 146199 314379 324001
15000 – 19999 1600 12250 53412 176406 269694
20000 – 24999 1570c 8751e 25931 99649 210926
25000 – 29999 12628 58651 147295
30000 – 39999 660 2561 13573 60169 183254
40000 – 59999 560d 1261f 8358 44794 150440
60000 < 3463g 6440 36434 128263
Total no. of HHs 952,580 1,244,738 1,452,576 1,582,215 1,855,553
Affordability of Home-ownership

−240
8%
1− 1+
$1𝑚 = 𝑃𝑀𝑇 12 ⇒ 𝑃𝑀𝑇
8%
12
= $8,364.4
PV of Annuity

k s tse 73
Affordability of Home-ownership

−240
8%
1− 1+
$1𝑚 = 𝑃𝑀𝑇 12 ⇒ 𝑃𝑀𝑇 = $8364.4
8%
12

o Suppose an average HH owns a flat priced at $3 million

(Year 96 was a peak year)?
o The average mortgage payment per month is $25,094
o How does this compare with the median HH income??

k s tse 74
Affordability Index

• What does it mean??

k s tse 75
 Domestic Households by Monthly Domestic
Household Income, 1991, 1996 and 2001
Monthly Domestic 1991 1996 2001
Household Income % of % of % of
(HK$) Number total Number total Number total
< 2,000 75 552 4.8 55 597 3.0 65 855 3.2
2,000 - 3,999 115 236 7.3 68 272 3.7 97 568 4.8
4,000 - 5,999 202 511 12.8 75 595 4.1 93 018 4.5
6,000 - 7,999 218 388 13.8 105 639 5.7 116 340 5.7
8,000 - 9,999 181 846 11.5 136 577 7.4 120 721 5.9
10,000 - 14,999 314 379 19.9 324 001 17.5 318 623 15.5
15,000 - 19,999 176 406 11.1 269 694 14.5 262 086 12.8
20,000 - 24,999 99 649 6.3 210 926 11.4 223 708 10.9
25,000 - 29,999 56 851 3.6 147 295 7.9 159 470 7.8
30,000 - 39,999 60 169 3.8 183 254 9.9 219 229 10.7
40,000 - 59,999 44 794 2.8 150 440 8.1 197 311 9.6
>=60,000 36 434 2.3 128 263 6.9 179 483 8.7
Total 1 582 215 100.0 1 855 553 100.0 2 053 412 100.0

k s tse 76
Disappearing Middle Class: Widening Wealth Gap
1996 2001 2009
Monthly HH Income (HK$)
(% of total HH) (% of total HH) (% of total HH)
< 4,000 6.7 8 7.9
4,000 - 5,999 4.1 4.5 5.9
6,000 - 7,999 5.6 5.7 7.2
8,000 - 9,999 7.4 5.9 7.1
10,000 - 14,999 17.5 15.4 14.5
15,000 - 19,999 14.5 12.8 12
20,000 - 24,999 11.4 10.9 10.2
25,000 - 29,999 7.9 7.8 7
30,000 - 39,999 9.9 10.7 10.4
40,000 - 59,999 8.1 9.6 9.4
>60,000 6.9 8.7 8.4
Total 100 100 100
• Source of Data: Census and Statistics Department, HKSAR

k s tse 77
 Median Monthly Income and Earnings
HKD
20000 Median Monthly HH Income
Median Monthly Earnings of Employed Persons 18000
18000 17500 17500
17000
16500
16000 16000 16000
16000

14000

12000
10500 10300
10,000 10000 9800 10000 10000 10100
10000

8000

6000

4000

2000

0
2002 2003 2004 2005 2006 2007 2008 2009

k s tse 78
 Property Price and Affordability
Best Lending Rate (Prime Rate)
300000 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 281689
5.11% 5% 5.02% 6.12% 7.90% 7.59% 5.39% 5% 5% 5%
250000

200000
165494

150000

100000

50000
55661 66617
0
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Class A (40 sqm) Class B (40 sqm to 69.9 sqm) Class C (70 spm to 99.9sqm)
Class D (100sqm to 159.9sqm) Class E (160 sqm)
k s tse 79
 Property Price and Affordability

Property Price (HK$/m2) and Median Monthly Household Income

2002 2003 2004 2005 2006 2007 2008 2009
Price 25,287 21,047 28,114 36,050 38,910 43,184 56,655 56,655
HH
16,50016,000 16,000 16,000 17,000 17,500 18,000 17,500
Income

k s tse 80
 Property Price and Affordability

Property Price (HK$/m2) and Median Monthly Household Income

2002 2003 2004 2005 2006 2007 2008 2009
Price 25,287 21,047 28,114 36,050 38,910 43,184 56,655 56,655
HH −240
16,50016,000 16,000 16,000 5% − 2.5%
Income 1 − 17,000
1 + 17,500 18,000 17,500
12
40 × $56,655 × 0.7 = 𝑃𝑀𝑇
5% − 2.5%
12
→ 𝑃𝑀𝑇 = $8,258
k s tse 81
 Affordability Index
Monthly Mortgage Payment and Median HH Income
$180,000

$160,000
Median Monthly HH Income Class A
Class B Class C
$140,000 Class D Class E
$120,000

$100,000

$80,000

$60,000

$40,000

$20,000

$-
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

k s tse 82
 Monthly HH Income
Affordability Index 𝐴𝐼 =
Monthly Mortgage Payment
6.00
Class A Class B Class C Class D Class E
5.00

Affordability: Safety Threshold > 2x

4.00

3.00

2.00

1.00

0.00
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

k s tse 83
Problems of Affordability Index

• The demand for housing (investment) is affected by ability to

make the downpayment for home purchase (usu. 30% of flat
price)

• Principal payment can be regarded as savings that potentially

increase the homeowner’s wealth (equity value of property)

k s tse 84
 ◼◼ Dec
Jan 2009:
2002: $8,000
$3,000 psf
Property Price in Hong Kong Dec 2011: $8,800 ◼
◼
July 2003: $2,200-2,400 psf
April 2004: $3,500-$3,800 psf ◼
Dec
◼ Dec 2012:
2007: $5,500 >psf$10,000 ◼

◼ TKS = Tai Koo Shing ( 太 古 城), 28-30 years◼oldJun 2013:estate

residential > $15,000
on east
side of Hong Kong Island, popular among expatriates from Japan and Korea.

Residential Property Price

per sq. ft of gross area TKS
Asian
Jun 94: Oct 97: Financial
9000 $8400 psf
$5200 psf Dec 95: Crisis
8000
$4200 psf
7000
6000
5000 Pre-Sale Jan 98:
Price
4000 prohibited Handover $6800 psf
3000 by HKG Outlook
2000
1000
0
Jan-92

Jan-93

Jan-94

Jan-95

Jan-96

Jan-97
May-

May-

May-

May-

May-

May-
Sep-

Sep-

Sep-

Sep-

Sep-

Sep-
Month/Year
k s tse 85
Issues related to the Rise and Fall of Property Price

similarly, sellers are more likely to default when price is

rising

• Government’s Stabilization policy needed

k s tse 86
Contents
• Introduction
• Stock Market, Property Market, GDP, Consumption.
• Characteristics of Hong Kong Economy
• Real Estate Market Activities and Bubbles
• Supply and Demand Conditions
• Affordability Issues
•Residential Price Performance

k s tse 87
 Property Market Anomaly ?

200 000
HK$ Price per square meter: Hong Kong Class A
180 000
𝑃𝑟𝑖𝑐𝑒𝐹𝑒𝑏 − 𝑃𝑟𝑖𝑐𝑒𝐽𝑎𝑛
160 000
𝑀𝑅𝐹𝑒𝑏 =
140 000 𝑃𝑟𝑖𝑐𝑒𝐽𝑎𝑛
120 000
100 000
80 000
60 000
40 000
20 000
0
Apr-02

May-03
Mar-01

Mar-07

May-09

Aug-17
Apr-08
Nov-02

Jul-05

Oct-07

Aug-11
Feb-00
Aug-00

Feb-06
Sep-06

Jun-15
Dec-15
Sep-01
Jan-99

Jun-04
Jan-05

Nov-08

Dec-09
Jul-10

Oct-13
May-14

Jul-16
Jul-99

Dec-03

Sep-12
Mar-13
Jan-11

Jan-17
Feb-12

Nov-14
• Monthly performance of property price? Any market anomaly?
k s tse 88
Property Market Anomaly ?

𝑀𝑅𝑡 = 𝛽1 + 𝛽2 𝐹𝑒𝑏 + 𝛽3 𝑀𝑎𝑟 + 𝛽4 𝐴𝑝𝑟 + 𝛽5 𝑀𝑎𝑦 +

𝛽6 𝐽𝑢𝑛 + 𝛽7 𝐽𝑢𝑙 + 𝛽8 𝐴𝑢𝑔 +𝛽9 𝑆𝑒𝑝 +𝛽10 𝑂𝑐𝑡 + 𝛽11 𝑁𝑜𝑣 +𝛽12 𝐷𝑒𝑐

• MR is monthly return
• Feb, Mar, Apr, May etc are all Dummy Variables
– Feb = 1 for the month of Feb, otherwise 0 etc.
• Regression Results ??

k s tse 89
 Property Market Anomaly ?

𝑀𝑅𝑡 = 𝛽1 + 𝛽2 𝐹𝑒𝑏 + 𝛽3 𝑀𝑎𝑟 + 𝛽4 𝐴𝑝𝑟 + 𝛽5 𝑀𝑎𝑦 +

𝛽6 𝐽𝑢𝑛 + 𝛽7 𝐽𝑢𝑙 + 𝛽8 𝐴𝑢𝑔 +𝛽9 𝑆𝑒𝑝 +𝛽10 𝑂𝑐𝑡 + 𝛽11 𝑁𝑜𝑣 +𝛽12 𝐷𝑒𝑐
Coefficients Standard Error t Stat
Intercept 2.79% 0.008 3.548
Result for Class Feb -1.53% 0.011 -1.396
A—Hong Kong Mar -2.14% 0.011 -1.949
Island ?? April -1.47% 0.011 -1.324
May -2.64% 0.011 -2.372
Jun -3.45% 0.011 -3.102
Implications ?? July -2.66% 0.011 -2.385
Aug -1.54% 0.011 -1.382
Sep -2.31% 0.011 -2.071
Oct -2.65% 0.011 -2.381
Nov -2.83% 0.011 -2.544
Dec -2.27% 0.011 -2.036
k s tse 90
 Property Market Anomaly ?

𝑀𝑅𝑡 = 𝛽1 + 𝛽2 𝐹𝑒𝑏 + 𝛽3 𝑀𝑎𝑟 + 𝛽4 𝐴𝑝𝑟 + 𝛽5 𝑀𝑎𝑦 +

𝛽6 𝐽𝑢𝑛 + 𝛽7 𝐽𝑢𝑙 + 𝛽8 𝐴𝑢𝑔 +𝛽9 𝑆𝑒𝑝 +𝛽10 𝑂𝑐𝑡 + 𝛽11 𝑁𝑜𝑣 +𝛽12 𝐷𝑒𝑐
Coefficients Standard Error t Stat
Intercept 2.48% 0.009 2.861
• Result for Feb -1.82% 0.012 -1.502
Class B—Hong Mar -0.88% 0.012 -0.728
Kong Island ?? April -2.56% 0.012 -2.086
May -1.94% 0.012 -1.583
Jun -2.51% 0.012 -2.051
• Implications ?? July -2.76% 0.012 -2.248
Aug -1.35% 0.012 -1.100
Sep -0.39% 0.012 -0.315
Oct -4.02% 0.012 -3.281
Nov -2.90% 0.012 -2.365
Dec -1.46% 0.012 -1.188
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 End

• Housing market analysis includes economic and

demographic factors such as supply, demand, vacancy,
rent and price level, economic growth and decline,
comparable properties, and forecasts of many of these
factors at the city, national and regional levels.

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 Q&As
Kwok-Sang (Maurice) Tse
The University of Hong Kong
ktse@hku.hk

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