Determinants of Property Prices in Hong Kong SAR Implications for Policy

This paper uses an econometric model of residential property prices in Hong Kong SAR to assess the effectiveness of alternative policies in slowing the increase in property prices. The rapid rise in property prices is well explained by macroconomic fundamentals; real GDP per capital, real domestic c...

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Bibliographic Details
Main Author: Craig, R.
Other Authors: Hua, Changchun
Format: eBook
Language:English
Published: Washington, D.C. International Monetary Fund 2011
Series:IMF Working Papers
Subjects:
Online Access:
Collection: International Monetary Fund - Collection details see MPG.ReNa
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245 0 0 |a Determinants of Property Prices in Hong Kong SAR  |b Implications for Policy  |c R. Craig, Changchun Hua 
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300 |a 15 pages 
651 4 |a Hong Kong Special Administrative Region, People's Republic of China 
653 |a Production Analysis and Firm Location: Government Policies 
653 |a Interest rates 
653 |a Credit 
653 |a Real Estate 
653 |a Transaction tax 
653 |a Finance 
653 |a Public finance & taxation 
653 |a Monetary economics 
653 |a Taxes 
653 |a Financial services 
653 |a Real interest rates 
653 |a Urban, Rural, and Regional Economics: Housing Demand 
653 |a Nonagricultural and Nonresidential Real Estate Markets 
653 |a Housing Supply and Markets 
653 |a Monetary Policy, Central Banking, and the Supply of Money and Credit: General 
653 |a Housing; Prices 
653 |a Money 
653 |a Domestic credit 
653 |a Property & real estate 
653 |a Regulatory Policies 
653 |a Banks and Banking 
653 |a Prices 
653 |a Interest Rates: Determination, Term Structure, and Effects 
653 |a Personal Income and Other Nonbusiness Taxes and Subsidies 
653 |a Taxation 
653 |a Money and Monetary Policy 
653 |a Land prices 
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520 |a This paper uses an econometric model of residential property prices in Hong Kong SAR to assess the effectiveness of alternative policies in slowing the increase in property prices. The rapid rise in property prices is well explained by macroconomic fundamentals; real GDP per capital, real domestic credit, construction costs, land supply, and the real interest rate. Policy can influence the property market though land supply and prudential and tax policy, with the latter policies taking the form of a stamp duty on property transactions and a tighter loan-to-value ratio (LTV) on lending. Land supply is the most effective policy insturment for restraining property price increases but it operates with a significant lag. The LTV and stamp duty dampen speculative activity that drives up property prices. While these policies can slow the increase in the short run, they should be guided by their long run objectives of financial stability and counteracting speculation