Question

Discuss the roles of property sector in the macro-economy with reference to Hong Kong. Please write the detailed answer (around 800 words).

Answer 1

ANS

Inside the Hong Kong economy the property area assumes a critical job. Lodging is the most significant type of putting something aside for some families. As of now, about portion of household credit in the financial segment incorporates contract advances for the acquisition of private properties and advances for building and redesign, land development and venture. Changes in property costs and leases affect customer value expansion and on Hong Kong 's intensity. Land deals and land exchange stamps were likewise a significant wellspring of government income.

In the repercussions of the Asian monetary emergency, the property cost dropped forcefully and stayed low given the brisk improvement in the general economy.

The property value fell forcefully contrasted with the costs of different merchandise and ventures in the result of the Asian budgetary emergency, coming back to its level in the mid 1990s. During the ensuing decade, property costs were to a great extent stable, however further debilitated in the last piece of 2000. Mirroring the decrease in the property cost, nethousing value in the private part is anticipated to have tumbled from 23/4 times GDP in 1997 to 11/2 times in 2000, practically back to the point in the mid 1990s. The dropping property costs have brought about the issue of negative value for certain family units.

Numerous regions of the economy might be impacted by changes in property costs across various channels. Private utilization and spending – and in this way request development – might be affected by the effect of salary and the asset report. Ourempirical proof shows that about a fourth of the fall in genuine GDP in 1998 prompted the decrease in the property cost. In the consequence of the Asian money related emergency, the decrease in rents represented about portion of the fall in the customer value file.

The financial segment has likewise been adversely affected by the frail property advertise, however the general money related circumstance stays solid. At last, the decrease in the property cost has effectsly affected the monetary equalization, as land and other property-related incomes have fallen significantly in the powerless property advertise.

REFERENCE

Bank for International Settlements (1998), “The Role of Asset Prices in the Formulation of Monetary Policy,” Conference Paper, March 1998. Bernanke, B. and M. Gertler (1995), “Inside the Black Box: The Credit Channel of Monetary Policy Transmission,” Journal of Economic Perspectives, Volume 9, No.4, pp. 27-48. Kennedy, N. and P. Andersen (1994), “Household Saving and Real House Prices: An International Perspective,” Bank for International Settlements Working Paper, No. 21. Miles, D. (1992), “Housing Markets, Consumption and Financial Liberalisation in the Major Economies,” European Economic Review, pp. 1093-1136

PLZ LIKE MY ANS