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Housing Vacancy and Rental Adjustment: Evidence from Hong Kong

Author

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  • Raymond Y. C. Tse

    (Department of Building and Real Estate, Hong Kong Polytechnic University, Hung Hom, Kowloon, Hong Kong, bsrtse@polyu.edu.hk.)

  • Bryan D. MacGregor

    (Centre for Property Research, Department of Land Economy, University of Aberdeen, Aberdeen, AB24 3UF, UK, b.d.macgregor@abdn.ac.uk.)

Abstract

The traditional rental adjustment equation is flawed in that the equilibrium paths for the adjustment of rents and vacancy rates cannot hold simultaneously over time. This paper suggests a two-equation model of rental adjustments based on adaptive expectations rather than the single-equation model presented in the traditional literature, and provides empirical tests. Annual data from the housing market in Hong Kong during the 1980-96 period are consistent with the adjustment equation. The results also show that the rate of change of real rents is neutral with respect to inflation.

Suggested Citation

  • Raymond Y. C. Tse & Bryan D. MacGregor, 1999. "Housing Vacancy and Rental Adjustment: Evidence from Hong Kong," Urban Studies, Urban Studies Journal Limited, vol. 36(10), pages 1769-1782, September.
    • Handle: RePEc:sae:urbstu:v:36:y:1999:i:10:p:1769-1782
    DOI: 10.1080/0042098992818
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    References listed on IDEAS

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    Cited by:

    1. Honglin Wang & Chu Zhang & Weihang Dai, 2013. "Rental Adjustment and Housing Prices: Evidence from Hong Kong's Residential Property Market," Working Papers 012013, Hong Kong Institute for Monetary Research.

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