A Study of Housing Affordability in Relation to Economic Development in Hong Kong

Hong Kong is one of the most densely populated urban environments in the world. Under its laissez faire free economy, the government dominates the supply of land. The government has applied different measures to ensure affordability in public housing, in rent setting as well as various subsidised-ownership programmes. Starting from minimal intervention towards privatisation, Hong Kong has adopted several measures to obtain a sustainable affordable housing environment along with its economic development, which can be a unique reference for housing provision of other developing countries. The prime intent of this paper is to investigate Hong Kong’s public housing policy towards affordability, in relation to various stages of economic development. This paper examines selected aspects of economic development in relation to affordable housing provision and its influence on households’ affordability. This paper investigates the role of GDP, inflation rate, housing price and households’ income on housing affordability and tries to identify the relationship between affordability and those economic indicators. The study suggests that housing price, income and inflation rate plays a dominant role on affordability rather than GDP.