Comparing two financial crises: The case of Hong Kong real estate markets

Abstract

Hong Kong is no stranger to bubbles or crisis. During the Asian financial crisis (AFC), the Hong Kong housing price index dropped more than 50 percent in less than a year. The same market then experienced the Internet bubble, the SARS attack, and recently the global financial crisis (GFC). This chapter provides some "stylized facts", follows the event-study methodology to examine whether the markets behaved differently in the AFC and GFC, and discusses the possible linkage to the change in government policies ("learning effect") and the flow of Chinese consumers and investors to Hong Kong ("China factor").