The first step on the housing ladder: A natural experiment in Hong Kong

The article presents and illuminates evidence, based on recent Hong Kong experience, indicating the existence of a "housing ladder effect" when housing prices increase or decrease. An increase of housing equity at the bottom of the ladder tends to translate into a trading up activity that will both increase housing market turnover and buoy up the entire housing market. Based on a natural experiment through the introduction of a public housing privatization scheme, this article demonstrates the importance of the first step on the housing ladder using a logit model.