Trends in the Hong Kong Real Estate Market - Dissertation Example

The second research method was the interview method which was conducted on 16 subjects. The subjects of the research were investors and buyers of the Hong Kong property.

With the research, the problem areas of this consistent price increase have been pointed out and the researcher has made plausible recommendations to resolve these issues. Government intervention has to be strengthened. Taxes, should be levied, supply of land has to be increased to meet the demand by auctioning government-owned land, construction of compact and multi-storeyed buildings along with the construction of reasonably priced accommodation schemes by the government in an attempt to control prices by satisfying demand. Moreover, property ownership laws should be stricter and resale of land should be time-limited to help control the prices of Hong Kong property and to avoid a price bubble burst.

In this chapter, the introduction and the background of the research have been stated. The aims, objectives, hypothesis, and outline of the research have been illustrated also.

1.2 Introduction

The research paper is on the trends in the Hong Kong real estate market. The prices of real estate in Hong Kong have increased tremendously and many speculate that there is a ‘bubble’ that may burst any time soon. Olsen (2011) explains that this is because the prices have reached a record high and even with low-interest rates, economic slowdown, and an aging population, the prices are increasing at 2% every year. The research focuses on the reasons for this price increase and at the same time tries to analyze whether there is a bubble that may burst any time soon or if the increased prices are a permanent feature of the estate market.

1.3 Background

according to Carter (2011), the Hong Kong real estate market has seen many ups and downs, especially since 1997 when it became part of China again. There was an economic crash around that time and just before that, the real estate prices hiked just as they have today. However, Zarathustra (2011) explains that there are strong economic indications that the economy will suffer such a downfall again. This is because the prices of real estate have been growing at an unbelievably high rate which seems rather fabricated and unreal. There is a shortage of supply of land in the market and at the same time, investors are continually investing even when the prices are increasing every month. The interest rates are still low, which attracts prospective buyers to buy more. Moreover, Carter (2011) adds that the Chinese from Mainland find it more lucrative to invest in Hong Kong. Coupled with that, there are investors from all over the world especially multinationals that want to make Hong Kong their business hub which is an easy gateway to the Chinese market. Additionally, with the thriving economy, the standards of living of the locals are increasing and they continually look for upgrading their living space and buying or renting better places for themselves. Moreover, Zarathustra (2011) adds that as the economy grows, firms expand and require more office space and accommodate more employees thereby needing more real estate. according to Suen (2011), thus there is a consistent increase in demand which the supply cannot fulfill and thus this causes a further increase in the prices.