1. 1 BRE Confidence Index for Residential Property (2005:Q1, March 2005) Presenter: Dr. Eddie C. M. Hui Research Centre for Construction and Real Estate Economics The Hong Kong Polytechnic University 30 March 2005 © The Hong Kong Polytechnic University 2005. All Rights Reserved.

2. 2 Project Team & Collaborators Hong Kong Polytechnic University Hong Kong Baptist University Texas A&M University, USA University of Cambridge, UK

3. 3 Uniqueness of BRE Project It uses: Forward looking (predictive) approach – not based on historic data or price trends It focuses on:  Developmental changes in price expectations and confidence over time  Trends of housing demand, decisions and preferences It establishes: Time-series indices for different groups of housing participants It targets at: Residential property markets We are: Independent, professional and experienced researchers in real estate economics

4. 4 Research Methodology Method: Longitudinal telephone survey Questionnaire design: Simple and straight-forward, and worded in everyday Chinese Rating scale: 5-Point Likert scale Sample size: Randomized and anonymous sample of 23,000 telephone numbers per survey Successful interviews: Aim at 1,000 per survey Pilot: Trial study before full-scale surveys Interviewers: Independent and trained university students under close supervision Index Computation: Based on non-equal weighted confidence scores of price expectations and sentimental questions Software used: Computer-Assisted Telephone Interviewing (CATI) and Statistical Package for the Social Sciences (SPSS)

5. 5 Groups of Respondents A. Homeowner A1. Owner in market, considering purchase A2. Owner and conditional purchaser A3. Owner and non-buyer B. Non-homeowner B1. Non-owner in market, considering purchaser B2. Non-owner and conditional purchaser B3. Non-owner and non-buyer

6. 6 Composition of Respondents (2005:Q1, March 2005)

7. 7 Surveys Conducted DatesValid Samples Completed Interviews Response Rates (%) Dec 2003 3,51581023.04 March 2004 4,21496022.78 June 2004 5,5921,17621.03 Sept 2004 4,35989320.48 Dec 2004 4,9321,15623.43 March 2005 4,9421,07821.81

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14. 14 Expected Price Change (%) before and after Tung’s Resignation on 10 March 2005 Survey Date 8 Mar9 Mar11 Mar12 Mar13 MarOverall Mean 5.954.866.365.574.935.62 Mode 10.05.0 5.00 St. Dev. 4.164.243.864.104.354.09 Before Resignation After Resignation

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18. 18 Weighted Average of Existing and Preferred Flat Size (sq. ft.) 2004 Dec Survey2005 March Survey ExistingPreferredExistingPreferred Homeowner 733916756920 Non-home owner 664799640740

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22. 22 Forecast of Economic Conditions (% of Respondents) 3 Months1 Year3 Years HONHOHONHOHONHO Better & Much Better 52.349.568.066.544.951.0 Same 35.445.513.220.09.98.5 Worse & Much Worse 4.72.57.04.03.75.0 Don’t Know 7.62.511.89.541.535.5 Total 100

23. 23 Forecast of Family Income (% of Respondents) 3 Months1 Year3 Years HONHOHONHOHONHO Greatly & Somewhat Increase 25.024.541.646.547.650.5 Same 69.365.543.939.017.413.0 Greatly & Somewhat Decrease 3.36.53.74.54.34.0 Don’t Know 2.43.510.810.030.732.5 Total 100

24. 24 Forecast of Job Opportunities (% of Respondents) 3 Months1 Year3 Years HONHOHONHOHONHO Better & Much Better 23.625.034.436.028.335.5 Same 57.550.543.4 35.525.920.0 Worse & Much Worse 5.77.55.26.06.65.0 Don’t Know 13.217.0 22.539.239.5 Total 100

25. 25 Forecast of Ability to Buy a Property (% of Respondents) 3 Months1 Year3 Year HONHOHONHOHONHO Better & Much Better 24.61731.628.538.644.0 Same 64.66549.0 25.923.5 Worse & Much Worse 4.210.03.87.52.99.0 Don’t Know 6.68.015.615.032.623.5 Total 100

26. 26 Conclusions Consumer confidence on property markets continues to rise moderately. The price level of housing is considered somewhat too high by the majority of people, following the same pattern of previous surveys. Yet housing prices were expected to increase marginally by an average of 5.6% in the next three months. Household income was cited the most important factor affecting housing decision. A majority of respondents rated interest rate as “important” and “very important”. Economic conditions were expected to be “better” or “much better” in three months by about half respondents; job prospect and household income by one-quarter. There appears to be a judicious blend of optimism and caution, with housing consumers paying close attention to the possible rise in interest rates.

27. 27 Next Two Surveys June 2005 Sept 2005 RCCREE Website: http://www.bre.polyu.edu.hk/rccree/index.htm http://www.bre.polyu.edu.hk/rccree/index.htm BRE Index Project Website: http://www.bre.polyu.edu.hk/research/bre_index/ index.htm

28. 28 Q & A Thank You

29. 29 Additional Information Investment Ratings (in percent) Survey No Very Good NeutralBadVery BadDK Total 1 (Dec03)3.625.232.227.64.76.7 100 2 (Mar04)1.42829.431.82.37.1 100 3 (Jun04)1.82432.931.62.37.4 100 4 (Sep04)1.626.628.928.63.610.7 100 5 (Dec04)3.424.831.4281.910.5 100 6 (Mar 05)2.634.031.824.80.56.3 100

30. 30 Additional Information

31. 31 Additional Information Good / Bad time to Buy a Property (in percent) Survey No Very Good Somewhat Good Somewhat Bad Very BadDKTotal 1 (Dec03)6.743.131.43.815100 2 (Mar04)1.841.836.63.216.6100 3 (Jun04)2.738.244.82.911.4100 4 (Sep04)2.139.639.82.915.6100 5 (Dec04)3.434.345.52.514.3100 6 (Mar 05)2.742.240.32.911.9100

32. 32 Additional Information

33. 33 Additional Information Current Housing Prices (in percent) Survey No Extremely High Somewhat too High About Right Somewhat too Low Extremely LowDK Total 1 (Dec03)9.132.637.892.19.4 100 2 (Mar04)15.435.733.85.70.29.2 100 3 (Jun04)17.533.236.64.30.48 100 4 (Sep04)16.940.432.13.915.7 100 5 (Dec04)19.237.927.81.70.812.6 100 6 (Mar 05)19.741.526.95.10.56.3 100

34. 34 Additional Information

35. 35 Additional Information Expected Housing Prices in 3 Months (in percent) Survey NoRiseFallSameDKTotal 1 (Dec03)42.96.827.223.1100 2 (Mar04)64.34.516.414.8100 3 (Jun04)36.78.843.111.4100 4 (Sep04)491.832.816.4100 5 (Dec04)52.63.426.117.9100 6 (Mar 05)56.82.221.819.2100

36. 36 Additional Information

37. 37 Additional Information Expected Housing Prices in 3 Months (in percent) 1 (Dec03)2 (Mar04)3 (Jun04)4 (Sep04)5 (Dec04) 6 (Mar 05) Above +20%01.91.11.53.2 0 +11% to +20%7.56.24.72.54.4 2.9 +6% to +10%19.824.118.722.417.7 24.3 +1% to +5%57.650.844.363.549.4 60.1 -1% to -5%10.32.77.81.52.5 2.0 -6% to -10%3.41.94.20.50.6 1.2 -11% to -20%003.100 0 Above -20%00100 0 Don't Know1.412.415.18.122.2 9.5 Total 100

38. 38 Additional Information

39. 39 Additional Information Expected Changes in Housing Prices in 3 months (in percent) Survey No123456 Survey DateDec 03Mar 04Jun 04Sep 04Dec 04Mar 05 Mean Value3.756.733.636.237.075.62

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