Discovering the financial and economic meanings behind housing block trades = 從相連單位交易中發現的金融和經濟含義


Project title
Discovering the financial and economic meanings behind housing block trades = 從相連單位交易中發現的金融和經濟含義
 
Principal Investigator
 
 
Grant Awarding Body
Research Grants Council
 
Grant Type
Faculty Development Scheme
 
Project Code
UGC/FDS15/B01/18
 
Amount awarded
HK$493,450
 
Funding Year
2018/19
 
Duration of the Project
24 months
 
Status
On-going
 
Abstract
As shown in Demographia (2017), Hong Kong homes are the least affordable in the world for the 8th straight years. To tackle the problem of unaffordability and build up a housing ladder, the government explicitly stated in the Policy Address its attention to take a series of measures, such as increasing land supply, implementing extraordinary stamp duties and offering a 'Starter Homes' programme. Nevertheless, critics have argued that the government lacks a comprehensive view of the housing market and hence that the policies are implemented in a piecemeal manner.

Moreover, while a body of literature has studied the lower end of the housing market (e.g., public housing and sub-divided housing), investigations of higher-end housing are relatively rare. Therefore, our project will complete the full picture of the property ladder by investigating block trade transactions in the Hong Kong housing market. This will help the government to design appropriate housing policies that balance the living needs of low-, middle- and high-income groups.

The proposed study will be important in several ways. First, it will suggest a new housing investment strategy. Traditional housing investment involves 'buy and hold' strategy, but 'short selling' is impossible. Our project will suggest that block trading creates extra returns for investors. Second, the project will study this unique market by computing the block trade premium. By using transaction-level data, it will mitigate the problem of aggregation bias, and hence provide a clearer picture of the housing market. Third, it will investigate the developers' strategies related to housing supply. Because the number of wealthy families is increasing, developers are targeting the high-end market in their recent residential projects by selling 'block trade units'. The 'block trade units' usually incorporate better designs and are limited in supply. Thus, by carefully tracking house trading activities in Hong Kong, our understanding of its high-end housing will be enhanced.

Based on a transaction-level dataset compiled by the investigators, this project will attempt to shed light on three important research questions: (1) Is the occurrence of block trade transactions related to the attributes of real estate developments, including the location and the developers' construction strategies? (2) Are block trade transactions profitable? (3) Are block trade activities related to the dynamics of the macro-economy? The research will be useful for formulating comprehensive housing policies and will be suitable to teach in econometrics and wealth management courses.