Internal and external determinants of housing price boom in Hong Kong

Farhad Taghizadeh-Hesary*, Naoyuki Yoshino, Aline Mortha, Alvin Chiu, Niki Naderi

*Corresponding author for this work

Research output: Contribution to journalReview articlepeer-review

1 Citation (Scopus)


Hong Kong's housing market witnessed a dramatic housing price appreciation in recent years, with the price index for private domestic housing units being three times higher than ten years ago. This trend is supported by both internal and external factors, as illustrated in this paper. By developing a theoretical model and an empirical analysis on the key variables influencing housing prices using monthly data from 1999 to 2018, we find that the main drivers of housing price appreciation are from the demand side and include income level, money supply and inflation. The main contribution of this study is the quantification of the role of Mainland China's macroeconomic factors in housing price booms in Hong Kong. Our study shows that capital inflow from and inflation and recessions in Mainland China contribute to increasing housing prices in Hong Kong because the city's real estate is seen as a way to preserve asset value. These findings call for the need for control of capital inflow between the two economies as well as for stricter regulations against empty houses in Hong Kong.

Original languageEnglish
Pages (from-to)597-620
Number of pages24
JournalBuletin Ekonomi Moneter dan Perbankan
Issue number4
Publication statusPublished - 2020 Dec 31
Externally publishedYes


  • Housing bubbles
  • Housing market
  • Housing prices
  • Monetary policy

ASJC Scopus subject areas

  • Finance


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