Housing affordability in Macau: evidence and policy

This paper investigates a contemporary issue of housing affordability in Macau. A theoretical general-equilibrium model substantiates that government policies influence the house price and quantity differently in different scenarios. Data of earnings by industry and occupation are employed to disclose the variation of affordability among different groups over the past seven years. The year of 2004 was the golden age of homeownership. In 2011, the situation deteriorated and the market price cast huge pressure on home buyers. Unaffordable house prices coexist with many vacant units. Facing such a market failure, people of Macau continuously request government intervention. The core of curbing soaring house prices is to reduce profits in house flipping. Policy suggestions mainly fall into aspects of taxation and regulations of financial assistance for mortgage.