The causal relationships between residential property prices and rentals in Hong Kong: 1982-1991

Yan Leung Stephen CHEUNG, Shu Ki TSANG, Sui Choi MAK

Research output: Contribution to journalArticlespeer-review

13 Citations (Scopus)

Abstract

This study examines the causal relationships between sale price changes and rental rate changes in the Hong Kong real estate market. Three different hypotheses are put forth: 1) the demands in the two markets are substitutes, 2) prices and rentals are positively correlated; and 3) prices and rentals are not correlated because of market segmentation. Using quarterly data of sale prices and rental rates for the five categories of residential property from four different districts, causal relationships are not found in 29 cases out of 40. For the other 11 cases, we find that price changes lead rental rate changes. The lag period is found to be one quarter, and this shows that the two markets are efficient: only one quarterly lag is necessary to establish causality where it exists. Copyright © 1995 Kluwer Academic Publishers.

Original languageEnglish
Pages (from-to)23-35
JournalThe Journal of Real Estate Finance and Economics
Volume10
Issue number1
DOIs
Publication statusPublished - Jan 1995

Citation

Cheung, Y.-L., Tsang, S.-K., & Mak, S.-C. (1995). The causal relationships between residential property prices and rentals in Hong Kong: 1982-1991. The Journal of Real Estate Finance and Economics, 10(1), 23-35.

Keywords

  • Sales prices
  • Rentals
  • Market segmentation
  • Hong Kong

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