The effectiveness and consequences of the government's interventions for Hong Kong's residential housing markets

Abstract

We study the effectiveness, consequences, and transmission mechanisms of the government's interventions for Hong Kong's residential housing market between 2009 and 2017. We use granular microlevel transaction data and adopt a regression discontinuity design to conduct the empirical analysis. We find that mortgage-tightening measures effectively curbed the overheated market by reducing price and volume while specific submarkets occasionally experienced volatility. Tax-driven measures effectively suppressed trading activity but triggered price volatilities across submarkets. Several rounds of measures had a spillover effect on subsidized public housing. Our findings have implications for policymakers seeking to review and revise property market intervention policies in Hong Kong and elsewhere.