Cohort Effects, Differential Accumulation and Hong Kong's Volatile Housing Market

As in much of east Asia, the past few decades have seen extraordinary rates of house price inflation in Hong Kong. After a relatively modest downturn in the early 1980s, prices rose rapidly until the Asian financial crisis in 1997. Since then, and despite increased government efforts to stimulate the stagnant property market, prices have continued to fall and negative equity remains pervasive. Given the centrality of property investment and speculation historically for households, financial institutions and for wider government economic strategies, the state of the residential market remains of central political and policy concern. Against this background of Hong Kong's apparently declining economic fortunes and major shifts in housing policy, this paper explores aspects of wealth accumulation in the home-ownership sector. Linking to a well-established set of debates in the academic literature, the paper explores the impact of policy change and house price trajectories on different cohorts of households. For example, those cohorts who entered home-ownership in the late 1980s generally saw rapid increases in their property values fuelled by generous state-assisted home-ownership schemes and a buoyant economy. By contrast, those entering in the late 1990s have experienced a much less favourable policy and economic environment. The paper also explores the extent to which price trajectories have varied in different sectors.