What can the Government do to improve Private Housing Affordability for Hong Kong Citizens?

11:31 am Hong Kong Education

By: Janae Wai

This is the 2nd of two excellent IB Economics Extended Essays that students have allowed ITS to published on our website.

Janae was an IB student who sat her exams in May 2016. Janae received a 45/45 overall grade for her IB. This is the extended essay she did on the significant and topical issue of the lack of affordable housing in Hong Kong. This problem was viewed in HK as a contributing factor to the ‘Occupy Central‘ movement of late 2014. This in my view is an excellent economics extended essay on the topic of market failure.

I would like to thank Janae personally for allowing ITS to display this EE on our website.

Gary Hadler
ITS Education Asia



High housing prices are a very significant issue in Hong Kong (HK). The lack of housing affordability in HK is among the most severe in the world. In addition to those who currently cannot afford housing, there are also worries among HK youth that they will not be able to afford their own home in the future. Private home ownership is a merit good that has high amounts of positive externalities. Therefore the government should do more to address the lack of affordable housing for HK residents. This leads to the research question: What can the Government do to improve Private Housing Affordability for Hong Kong Citizens?”

Secondary research was gathered to demonstrate the types of market failure apparent in the HK housing market and to obtain information concerning the effectiveness of policies that have been used in both HK and elsewhere to deal with the problem. This secondary research was analysed in relation to the primary data collected. The primary research includes interviews with relevant experts and a survey of the HK public to ascertain: a) whether they believe that this is a major social problem b) whether the policies undertaken by the current government are effective, and c) what additional actions can be recommended to reduce the problem.

The investigation showed that market failure was indeed present in the HK housing market. Several solutions were also recommended based on the primary and secondary research. The most supported solutions were those aimed at increasing the supply of affordable housing in HK. Recommendations include that the government should build more low cost housing, establish new towns outside the central business area and reduce government regulations and restrictions that increase the cost of developing new affordable housing. There were fewer consensuses on measures to reduce demand.

To read the full article: http://www.itseducation.asia/HK-Housing.htm

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