Macau | Affordability of local housing, key to real estate market health – Awarded UM Professor

Macau (MNA) – Lack of affordability and the gap between demand and supply are the key elements impacting the health of the Macau SAR (MSAR) real estate market, Rose Lai Neng, a recently awarded professor of finance and the associate dean of the Faculty of Business Administration, University of Macau (UM) said to MNA.

Ms. Lai sees housing prices in 2018 rising moderately, mainly marked by a ‘wait and see’ approach by potential buyers and an expected growth in supply. In addition, the ongoing measures aimed at curbing a possible sharp increase in prices could reinforce the trend this year.

However, she considers that beyond the evolution of prices, the affordability of housing is far out of reach for young people mulling to enter the market. Professor Lai Neng remarks that many couples may be able to afford to pay the mortgage, but they cannot finance the down-payment.

She also states that young couples willing to buy a house need to be sure their financial situation is solid, especially given that interest rate hikes in United States are “one of the crucial factors” that could tighten financial conditions during the year. “I don’t really want to see people spending most of their monthly income just going to the mortgage,” she says.

According to Ms. Lai, the MSAR Government should not be selling all the social houses, in order to provide solutions to less favoured segments of the population, similar to what the central government does in the Mainland.

Nevertheless, according to Professor Lai, the Macau market is so small and there are so little chances to diversify investment, that the property market continues to be one of the best options for investment.

Awarded considerations

Some weeks ago, Professor Lai received the 2017 Edwin S Mills Real Estate Economics Best Paper Award, for her work ‘US House Prices over the Last 30 Years: Bubbles, Regime Shifts and Market (In) Efficiency.’ The paper was co-authored with Prof Robert Van Order from George Washington University. The award recognizes the best article among the 30 top-tier academic papers published on Real Estate Economics.

Ms. Lai explained to MNA that the paper explores the structural composition and key features of real estate bubbles. The current awarded paper has its origin in other research analysing the real estate bubble that was affected by the burst of 2008 and the following financial crisis.