Privatization of public housing: Did it cause the 1998 recession in Hong Kong?

The authors find evidence that a public housing privatization program produced adverse effects on housing transactions and the economy in Hong Kong. A scheme announced in December 1997, offering tenants an opportunity to buy their units at deeply discounted prices, reduced public housing tenants' bids for private homes and adversely affected home transactions. This effect is more pronounced than the effects of the Asian Financial Crisis. An effect on housing prices is also indirectly shown though a demonstration that a structural break in the housing price relationship occurred at the time the privatization program was introduced. Declines in housing prices further eroded employment and set off a vicious circle.