An analysis of the determinants of housing transaction prices in Hong Kong and Macau

Abstract

Hong Kong and Macau have a high level of similarity in terms of geographical location, historical and political background, population density, and culture. However, there were few academic studies conducted for comparison of the property markets in these two cities. Therefore, this research was carried out to fill the gap. The aim of this doctorate thesis is to evaluate and compare the determinants of housing transaction prices in Hong Kong and Macau at microeconomics level. In line with the aim of study, the objectives of this research are to • identify the determinants affecting the residential unit prices in Hong Kong and Macau at microeconomics level; • find out the relationship between housing transaction price and its determinants in each city; and • compare the survey results and developed housing price models of the two cities. In order to investigate the determinants of housing prices in the two cities, a conceptual framework of 'Residential Unit Price Model' was proposed based on hedonic pricing modelling and literature review. It took into account the potential factors at microeconomics level, including reputation of developer, location, transportation, other buildings nearby, public amenities nearby, building age, quality image of the development, quality of finishing materials, private facilities provided, domestic unit size, floor level, unit orientation and types of view. Besides, various mathematical functions, like linear, semi-log, and log-linear forms were considered in order to identify the most appropriate expression between the housing transaction price and its determinants. The whole research was completed in three stages with different research methods utilised. In stage 1, qualitative approach by questionnaires survey was adapted to collect valuers' points of views on the conceptual framework. In stage 2, quantitative method by multiple regression analysis was adapted to develop the housing price models in Hong Kong and Macau. In stage 3, comparisons were made between the survey results and the developed models of these two cities. At the end, a qualitative approach by semi-structured interview with experienced valuation professionals was used to verify the research findings. The final results show that the determinants to the housing prices in Hong Kong and Macau have a high level of similarity. Location, quality image, unit size, building age, types of view, and floor level were identified as the six determinants of housing transaction prices in both cities. However, the influences of each factor in the two cities are not the same. Regarding mathematical expression, the relationship between the Hong Kong housing and its determinants was identified as a semi-log function with GFA or UFA as unit size; while the ones in Macau were found to be a liner function and a semi-log function with GFA as unit size. In application of the research findings, an example was provided in the thesis. It demonstrates that the determinants and functional forms identified in the study are applicable to other steady periods, subject to the recalibration with housing transaction data in the selected period.

Date of Award	14 Feb 2014
Original language	English
Awarding Institution	City University of Hong Kong
Supervisor	Sai On CHEUNG (Supervisor) & Chi Ming TAM (Supervisor)