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Comparing two financial crises: the case of Hong Kong real estate markets


  • LEUNG, K. Y. Charles
  • TANG, C. H. Edward


Hong Kong is no stranger to bubbles or crisis. During the Asian Financial Crisis(AFC), the Hong Kong housing price index drops more than 50% in less than a year. The same market then experiences the Internet Bubble, the SARS attack, and recently the Global Financial Crisis (GFC). This paper attempts to provide some “stylized facts” of the real estate markets and the macroeconomy, and follow the event-study methodology to examine whether the markets behave differently in the AFC and GFC, and discuss the possible linkage to the change in government policies (“learning effect”) and the flow of Chinese consumers and investors to Hong Kong (“China factor”).

Suggested Citation

  • LEUNG, K. Y. Charles & TANG, C. H. Edward, 2011. "Comparing two financial crises: the case of Hong Kong real estate markets," MPRA Paper 31562, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:31562

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    References listed on IDEAS

    1. Case Karl E. & Quigley John M. & Shiller Robert J., 2005. "Comparing Wealth Effects: The Stock Market versus the Housing Market," The B.E. Journal of Macroeconomics, De Gruyter, vol. 5(1), pages 1-34, May.
    2. Gregory W. Brown & Michael T. Cliff, 2005. "Investor Sentiment and Asset Valuation," The Journal of Business, University of Chicago Press, vol. 78(2), pages 405-440, March.
    3. Serpil Canbaş & Serkan Yılmaz Kandır, 2009. "Investor Sentiment and Stock Returns: Evidence from Turkey," Emerging Markets Finance and Trade, Taylor & Francis Journals, vol. 45(4), pages 36-52, July.
    4. Nan-Kuang Chen & Charles Leung, 2008. "Asset Price Spillover, Collateral and Crises: with an Application to Property Market Policy," The Journal of Real Estate Finance and Economics, Springer, vol. 37(4), pages 351-385, November.
    5. Chen, Nan-Kuang & Chen, Shiu-Sheng & Chou, Yu-Hsi, 2010. "House prices, collateral constraint, and the asymmetric effect on consumption," Journal of Housing Economics, Elsevier, vol. 19(1), pages 26-37, March.
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    Cited by:

    1. Kuang-Liang Chang & Nan-Kuang Chen & Charles Ka Yui Leung, 2013. "In the Shadow of the U nited S tates: The International Transmission Effect of Asset Returns," Pacific Economic Review, Wiley Blackwell, vol. 18(1), pages 1-40, February.
    2. Huang, Daisy J. & Leung, Charles Ka Yui & Tse, Chung-Yi, 2017. "What account for the differences in rent-price ratio and turnover rate? A search-and-matching approach," MPRA Paper 76864, University Library of Munich, Germany.
    3. Charles Ka Yui LEUNG & Wai Yip MA & Jun ZHANG, 2014. "The Market Valuation of Interior Design and Developer Strategies: A Simple Theory and Some Evidence," International Real Estate Review, Asian Real Estate Society, vol. 17(1), pages 63-107.
    4. Charles Ka Yui Leung & Tin Cheuk Leung & Kwok Ping Tsang, 2015. "Tax-driven Bunching of Housing Market Transactions: The Case of Hong Kong," International Real Estate Review, Asian Real Estate Society, vol. 18(4), pages 473-501.
    5. Dong Chen & Yanmin Gao & Mayank Kaul & Charles Ka Yui Leung & Desmond Tsang, 2016. "The Role of Sponsors and External Management on the Capital Structure of Asian-Pacific REITs: The Case of Australia, Japan, and Singapore," International Real Estate Review, Asian Real Estate Society, vol. 19(2), pages 197-221.
    6. Leung, Charles Ka Yui & Tang, Edward Chi Ho, 2013. "Speculating China economic growth through Hong Kong? Evidence from the stock market IPO and real estate markets," MPRA Paper 46346, University Library of Munich, Germany.
    7. Eric Wong & Andrew Tsang & Steven Kong, 2014. "How Does Loan-To-Value Policy Strengthen Banks' Resilience to Property Price Shocks - Evidence from Hong Kong," Working Papers 032014, Hong Kong Institute for Monetary Research.

    More about this item


    regime switching; structural change; small open economy; bounded rationality; banking policy;

    JEL classification:

    • E50 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - General
    • E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy
    • R20 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - General
    • G01 - Financial Economics - - General - - - Financial Crises
    • E60 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - General

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