Preview

In Recent Years, Hong Kong’s House Prices Have Risen Very Rapidly. Please Use the Supply and Demand Theory to Analyse the Reasons for Rising Housing Prices, and Also Discuss the Possible Effects on the Housing Market If

Better Essays
Open Document
Open Document
1593 Words
Grammar
Grammar
Plagiarism
Plagiarism
Writing
Writing
Score
Score
In Recent Years, Hong Kong’s House Prices Have Risen Very Rapidly. Please Use the Supply and Demand Theory to Analyse the Reasons for Rising Housing Prices, and Also Discuss the Possible Effects on the Housing Market If
Hong Kong is one of the most densely populated cities in the world. Meanwhile, it also has the highest housing price in the world. According to the 8th Annual Demographia International Housing Affordability Housing Affordability Survey’s report in 2011 which had been recommended by World Bank and the United Nations, Hong Kong had the most unaffordable housing in the survey with a median multiple of 12.6. Median multiple means median house price divided by gross annual median household income. To figure out the reasons which drive Hong Kong housing prices rise rapidly, this essay is divided into four parts to analyse the question. The first part will briefly introduce some basic information about Hong Kong housing market. The second part is going to take through upon the supply and demand theory which is the main theory to explain the question. The third part will explain the reasons in two aspects which are demand and supply. The final part will estimate possible effects on the housing market if there is a belief that house prices will keep rising.

It is essential to firstly introduce the special housing structure of Hong Kong. According to Hong Kong Housing Authority, there are almost 2.6 million residents units in Hong Kong. Of those, 761000 live in Public Rental Housing (PRH), 391000 live in Subsidized Home Ownership Housing and 1447000 live in Private Permanent Housing. PRH and subsidized home ownership housing which are provide by Hong Kong government are aimed at insuring low-income family have housing. In another word, almost half of Hong Kong residents live in houses with government subsidies.
According to Hong Kong Housing Authority Report
According to Hong Kong Housing Authority Report

Actually, the real customers in housing market are high-income families and speculators. They are able to afford the high housing price, what’s more, they can benefit from the appreciation in asset value. This housing structure is made by the government which
Continue Reading
View Writing Issues

You May Also Find These Documents Helpful

  • Powerful Essays

    Cih Level 3 Assignment 4
    • 3986 Words
    • 16 Pages

    Cih Level 3 Assignment 4

    Housing policy is usually analysed in economic terms, as a form of market. In theory, markets lead to efficient allocation through a complex process of matching supply and demand. This depends on competition, good information, the existence of multiple suppliers and the existence of multiple purchasers. In housing, this theory has limited application.…

    • 3986 Words
    • 16 Pages
    Powerful Essays
    Read More
  • Good Essays

    Uk House-Building Industry Analysis
    • 1430 Words
    • 6 Pages

    Uk House-Building Industry Analysis

    According to report of Key Note about house building industry in 2012, the market has been affected by the crisis of economic in over the world and the national financial difficulties in recent years. The demand for new building new house significantly still require in high lever, however there are some barriers such as affordability and mortgage to obstruct the recovery of housebuilding market.…

    • 1430 Words
    • 6 Pages
    Good Essays
    Read More
  • Good Essays

    Baby Boom Era Pros And Cons
    • 1686 Words
    • 7 Pages

    Baby Boom Era Pros And Cons

    (Pittis, 2015) In fact, due to Baby Boomers are looking for getting the maximum value from their single-family homes, a future increase in this specific market will make prices to reach a maximum value at certain point, resulting in a period of decline. (Ireland, 2015) For instance, Edmonton will present a reduce in housing prices due to both the large supply of homes in the market and economic issues related to the decline of Alberta’s oil extraction. As Pittis (2015) states, the combination of both factors will cause a reduction in the housing demand since there will be fewer buyers compared to the number of Boomers competing to sell their homes. In Ontario, there will be similar consequences, however, they will vary depending on where and what type of house is in the market. (Pittis, 2015) For instance, inner Toronto may not be hardly affected because its convenient place allows a limited number of single-family homes with a high demand from buyers. In contrast, sixty-four percent of inhabitants in the Great Toronto Area demonstrate being worried about a possible downturn in the real estate prices. (Ireland, 2015). In London, for instance, the vast space for construction will not provide the city with an scarcity value, reducing even more the housing prices in the area. (Pittis,…

    • 1686 Words
    • 7 Pages
    Good Essays
    Read More
  • Good Essays

    Uk Housing Market
    • 726 Words
    • 3 Pages

    Uk Housing Market

    The learning of economics begins with the needs and wants of materials. Everyone needs basic things to live their life: food, air, water and shelter. With the advancement of science and technology people desires become more sophisticated, now they don’t need just food they need “ Dominos pizza” or “Mc Donald Burger”, they want to wear designer wears, they don’t like just a room to live in they want buildings or their own home. More the variety increases and become more refined, the economy becomes more composite too. The study of supply and demand, basic concepts of economics is fundamental in today’s property market because even a single economic decision can change the market greatly. “The interplay of demand (the behaviour of buyers) and supply (the behaviour of sellers) determines the quantity of the good produced and the price at which it bought and sold.” David Begg, 2005. The impact of Supply and Demand could be influenced by many factors. “Demand describes the behaviour of buyers at every price” (David Begg, 2005). The demand in rental market increases to buy property if price goes down, however sellers will loss on their houses hence supply will decrease. If the price of property increases, consumers selling their property would make profit, increasing supply though unaffordability of consumer will make demand to fall.…

    • 726 Words
    • 3 Pages
    Good Essays
    Read More
  • Good Essays

    Supply and Demand and New Housing
    • 918 Words
    • 4 Pages

    Supply and Demand and New Housing

    (d) Draw the production-possibilities curve for chairs and tables on a graph, placing tables on the vertical axis and chairs on the horizontal axis.…

    • 918 Words
    • 4 Pages
    Good Essays
    Read More
  • Powerful Essays

    Key Factors Affecting Canadian Immigrants
    • 1439 Words
    • 6 Pages

    Key Factors Affecting Canadian Immigrants

    The Government of Canada immigration policy and especially new Investor Immigrants Plan has led to entering wealthier immigrant to Canada. The federal government announced that this immigration policy will be continued in the next five years and that means more demand for real estate and especially residential properties in Canada. Add 300,000 permanent residents a year to a country with a small population, raising the demand for homes and boosting prices for shelter. As a well-developed and safe country, Canada was an important destination for foreigner investors and based on this reason many of them came to Canada and invest in real estate market. Studies show the key factor in this scenario is that many new immigrants arrive in Canada’s large cities with a great amount of cash money and roughly 52% of newly arrived immigrants, bought homes in first five-year of their…

    • 1439 Words
    • 6 Pages
    Powerful Essays
    Read More
  • Good Essays

    Housing Bubble In Canada
    • 797 Words
    • 4 Pages

    Housing Bubble In Canada

    Housing price is a sensitive issue for everyone. Generally, the more expensive houses are, the more difficult it is for people to live. In fact, Toronto is one of the cities which has the most expensive housing price in the world. According to Royal Lepage’s website, an average Toronto house price was 624,923$ in 2015, the second highest price among all Canadian cities. Moreover, an article by Sherman (2016) states that Toronto’s house price was increased by 8 percent in 2015; this figure was ranked 12th in the world. As we can see, People who live in Toronto have been suffering from this problem. It is clear that an effective solution that stabilizes Toronto’s high housing price should be suggested by the Mayor of Toronto.…

    • 797 Words
    • 4 Pages
    Good Essays
    Read More
  • Better Essays

    Demand Side Factors
    • 2182 Words
    • 9 Pages

    Demand Side Factors

    House price watching has become a countrywide recreation. Horrible housing market has become an issue to the world. People are taking this as an important topic where in the future, house price will continue increase. Some people are saying that it is a speculative bubble; houses are risky assets with volatile prices. In other words, it might face over demand or under supply. In seller market, when the market demand for possession in the exacting area is high and when there is existing of shortage of high quality possession, such as scarce in supply, then the power of balance in the market will shifts to the seller. For the reason, it is apt excess demand in the market for good possession. Seller flexible to wait for offers on their possession to exceed their minimum selling price. In opposite, when the demand for any type of housing is weak and when there is excessive of possession available on market, then the powers will swap to potential buyers. Does anyone ensure that the house prices in rapid growth are causes by the fundamental factors of demand and supply and when it is an indefensible bubble? In this report, we explain how to appraise the situation of house prices, the factors that affecting the house price to increase rapidly, both whether the existences of bubble and what principal factors support housing demand, in a method that is argument in economic theory. Showing both Demand side factors and Supply side factors as well as in the long run and short run. In the short run, demand side factors tend to be more important come to influence the house price because the willingness and ability of potential home buyers or investors to make an offer to purchase a particular property.…

    • 2182 Words
    • 9 Pages
    Better Essays
    Read More
  • Better Essays

    China’s Real-Estate Bubble
    • 1039 Words
    • 5 Pages

    China’s Real-Estate Bubble

    The real-estate bubble in Chinas has been impacted by numerous factors. These factors consist of; low interest rates, increase of bank leading, cheap credit, and high real-estate investments within the population. The government has placed restrictions in the amount of property and individual can purchase. Bank lending “has been tightened to limit developers’ ability to undertake new projects and a new emphasis has been placed on the construction of low-cost housing” (Wheller,…

    • 1039 Words
    • 5 Pages
    Better Essays
    Read More
  • Powerful Essays

    Korean Housing Market and Its Improvement Measures
    • 1377 Words
    • 6 Pages

    Korean Housing Market and Its Improvement Measures

    The problems of housing policy are as follows. First, inefficiency of housing production. Due to high capital cost, underdeveloped housing finance system makes housing production depend upon speculation or economic situation. And due to inefficient production structure, price elasticity of input, and price elasticity and elasticity of substitution between input elements are very low.…

    • 1377 Words
    • 6 Pages
    Powerful Essays
    Read More
  • Good Essays

    Concept of Housing Affordability
    • 668 Words
    • 3 Pages

    Concept of Housing Affordability

    When the prices of land and the material use in construction is inflate, the costing will increase then make the housing prices will increase too. By this, household needs to expand more income to pay for housing when the housing price was increase.…

    • 668 Words
    • 3 Pages
    Good Essays
    Read More
  • Good Essays

    Unicorn Production Operation Management
    • 802 Words
    • 4 Pages

    Unicorn Production Operation Management

    The problem faced is of space crunch for a large population. HK has 1076 sq kms of space for accommodating 6 million people. This causes an impact on the rent and purchase of a house. Lack of Affordable Housing -Housing among the most expensive in the world.…

    • 802 Words
    • 4 Pages
    Good Essays
    Read More
  • Powerful Essays

    A Study on Housing Loan Demand in Malaysia
    • 8829 Words
    • 36 Pages

    A Study on Housing Loan Demand in Malaysia

    To most individuals housing represents the largest single investment item of a lifetime. This is especially true as family incomes increase and housing viewed less as a basic consumption and more as a key to a secure future. Developing countries have learned that the provision of decent housing for all cannot be left to the play of the market forces alone. Whereas the well-to-do few have no trouble in obtaining comfortable homes, the majority of families in the developing countries go without adequate housing and related facilities. Therefore, the governments found it necessary to intervene in the production of housing for their population.…

    • 8829 Words
    • 36 Pages
    Powerful Essays
    Read More
  • Good Essays

    Hong Kong's Economic Restructuring
    • 1248 Words
    • 5 Pages

    Hong Kong's Economic Restructuring

    Hong Kong underwent two economic restructurings after the Second World War. It transformed from an entrepot to an industrial city in the 1950s and an international financial centre in the 1980s. The prospering economy led to rapid population growth, thus increasing the society’s demand for urban planning and accelerating urbanization. However, after the 1970s, economic development changed the traditional family and marriage concepts, leading to changes in population size and structure.…

    • 1248 Words
    • 5 Pages
    Good Essays
    Read More
  • Good Essays

    Hong Kong Housing Problem Analysis
    • 745 Words
    • 3 Pages

    Hong Kong Housing Problem Analysis

    One of the main problems that affect the livability in Hong Kong is housing problem. Hong Kong has 7.3 million people living on 1,100 sq. km of land. There were around 6,700 people living on every square km. However, the ‘right to adequate housing’ and the ‘right to affordable’ are important dimensions resting on the foundation that adequate housing is a basic human need (Leckie 1992; Bengtsson 1995) and which ensures access to a safe and affordable home with freedom from forced eviction. This is the basic meaning in livable. However, is Hong Kong livable?…

    • 745 Words
    • 3 Pages
    Good Essays
    Read More

Related Topics