Using perplexity to explore the topic of housing affordability: a note for Housing Studies students

Using perplexity to explore the topic of housing affordability: a note for Housing Studies students

For students to explore a research topic to firm up a dissertation proposal, they need to ask a few important questions, which are related to:

A. academic domain

1. the scope of the academic topic of study (e.g. housing affordability)

2. the research gaps and issues regarding the academic topic of study

3. the academic theories employed to investigate the topic of study [in general and in specific place (e.g. Hong Kong)].

B. real-world domain

4. the real-world trends and issues related to the academic topic of study [in general and in specific place (e.g. Hong Kong)].

Based on the knowledge with regard to these four questions, the student is in an informed situation to produce a proposal that can be associated to the respective academic and real-world context that belong to this topic of study.

My account of the exploratory exercise with perplexity is as follows:

My question 1: "What is the scope of study on the academic topic of housing affordability?"

The reply: "The academic study of housing affordability encompasses a wide range of topics, methodologies, and applications, reflecting its complexity and significance in urban planning and policy-making.

Key Areas of Focus

1. Measurement Approaches:

Research on housing affordability primarily revolves around various measurement techniques, which are crucial for understanding the extent and nature of affordability issues. Common methods include:

• Normative Measures: These often involve ratio-based assessments (e.g., housing costs as a percentage of income) and residual income approaches (calculating disposable income after housing costs) 
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• Econometric Models: Techniques such as logit regression, hedonic pricing models, and simulation methodologies are employed to analyze affordability across different contexts 
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2. Application Domains:

Studies categorize housing affordability into several domains:

• Rental Housing Affordability (RHA): Challenges related to securing affordable rental options.
• Home-Ownership Affordability (HOA): Issues surrounding the financial feasibility of purchasing homes.
• Combined Housing and Transportation Affordability (CHTA): Evaluating the total cost burden when considering both housing and transportation expenses 
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• Housing and Mortgage Market Affordability (HMMA): The interplay between market conditions and affordability.
• Individual Household Affordability (IHA): Focused on specific household circumstances 
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3. Global Perspectives:

The scope of research extends internationally, addressing affordability in both developed and developing countries. Studies analyze systemic determinants, policy responses, and the socio-economic impacts of housing unaffordability across diverse geographic contexts, from North America to Asia and Africa 

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Research Trends and Challenges

Recent literature highlights several trends:

• An increase in empirical studies examining the effects of economic indicators like GDP, inflation, and household income on housing affordability 
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• A growing recognition of the need for context-specific solutions, as generic approaches often fail to address local conditions effectively 
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• The impact of external crises, such as the COVID-19 pandemic, has amplified discussions around equitable access to affordable housing 
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Future Directions

Scholars advocate for:

• A more nuanced understanding of how different measurement approaches affect policy outcomes.
• Enhanced interdisciplinary collaboration to address the multifaceted nature of housing affordability.
• Continued exploration into innovative policy measures that can effectively alleviate affordability pressures while promoting sustainable urban development 
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In summary, the academic study of housing affordability is a rich field that integrates various methodologies and perspectives, aiming to inform effective policies that address one of society's most pressing issues."

My question 2: "What are the main research gaps in the academic study of housing affordability?"

The reply: "Research on housing affordability has identified several key gaps that need to be addressed to enhance understanding and inform policy. These gaps include:

1. Data Availability and Quality

There is a significant lack of comprehensive, high-quality data on housing affordability, particularly for specific demographics such as extremely low-income households. Many studies rely on aggregated data that may not accurately reflect local conditions or the nuances of different communities, leading to a gap in targeted policy solutions 

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2. Longitudinal Studies

Most existing research is cross-sectional, providing a snapshot of housing affordability at a single point in time. There is a need for longitudinal studies that track changes in housing affordability over time, especially in response to economic fluctuations, policy changes, and demographic shifts. Such studies could provide insights into the long-term effectiveness of interventions 

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3. Impact of Policy Interventions

While various policies have been implemented to address housing affordability, there is limited research evaluating the effectiveness of these interventions across different contexts. Understanding which policies work best under specific conditions can help refine approaches to improving housing access and affordability 

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4. Intersectionality and Vulnerable Populations

Current research often overlooks the intersectionality of housing affordability with other social issues, such as race, gender, and disability. More studies are needed to explore how these factors influence housing experiences and outcomes for vulnerable populations, including marginalized communities and those facing systemic barriers 

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5. Regional Variability

There is a need for more localized studies that consider regional differences in housing markets and economic conditions. Research often generalizes findings across broader areas, which may not account for unique local challenges and opportunities related to housing affordability 

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6. Technological Innovations

The role of technology in addressing housing affordability is an emerging area that requires further exploration. This includes examining how digital platforms can improve access to affordable housing options or how technology can streamline the development process to reduce costs 

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Addressing these gaps will be crucial for developing effective strategies to tackle the ongoing challenges of housing affordability, ensuring that policies are informed by robust evidence and tailored to meet diverse community needs."

My question 3: "What are the main research issues in the academic study of housing affordability of Hong Kong?"

The reply: "The academic study of housing affordability in Hong Kong faces several pressing research issues that reflect the unique challenges of the region. These issues include:

1. Supply and Demand Dynamics

There is a critical need to better understand the underlying factors contributing to the severe imbalance between housing supply and demand in Hong Kong. Research has highlighted that low supply, coupled with high consumption and investment demand, drives unaffordability. However, more detailed studies are needed to analyze how land use policies, planning restrictions, and community politics influence this dynamic

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2. Impact of Public Housing Policies

Hong Kong's public housing system plays a significant role in shaping the housing market. Research indicates that unresponsive public-sector rents and long wait times for public housing exacerbate affordability issues for low-income households. Investigating how these policies affect both public and private housing markets, particularly for low-end housing, remains an important area for further study

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3. Health Implications of Housing Affordability

Despite the severe affordability crisis, there is a lack of research connecting housing affordability to physical and mental health outcomes in Hong Kong. Exploring this relationship could provide valuable insights into how housing conditions impact overall well-being and inform policy interventions aimed at improving living conditions

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4. Longitudinal Analysis of Housing Trends

Most existing studies provide a snapshot of housing conditions at specific points in time. There is a need for longitudinal research that tracks changes in housing affordability over time, particularly in response to economic shifts, policy changes, and demographic trends. Such studies could help identify effective strategies for mitigating affordability challenges

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5. Comparative Studies with Other Regions

While comparisons with cities like Singapore are often made, more comprehensive comparative studies could enhance understanding of what strategies might be applicable to Hong Kong's context. Analyzing different approaches to managing housing affordability across various metropolitan areas could yield valuable lessons for local policymakers

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6. Socioeconomic Disparities

Research often overlooks the intersectionality of socioeconomic factors affecting housing affordability in Hong Kong. More studies are needed to explore how race, gender, and income levels impact access to affordable housing, particularly for marginalized communities

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By addressing these research issues, scholars can contribute to a deeper understanding of the complexities surrounding housing affordability in Hong Kong and support the development of effective policies to alleviate this critical social challenge."

My question 4: "What is the trend of housing affordability in Hong Kong over the last 10 years?"

The reply: "Over the last decade, the trend of housing affordability in Hong Kong has been characterized by significant fluctuations, reflecting broader economic conditions, policy changes, and market dynamics.

Recent Trends

1. High Price-to-Income Ratios:
   • As of 2023, average home prices in Hong Kong were approximately 16.7 times the gross annual median household income, a slight improvement from 20.7 times in 2021 and 18.8 times in 2022. Despite this decline, Hong Kong remains the least affordable housing market globally for the twelfth consecutive year according to the Demographia International Housing Affordability Survey
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2. Declining Property Prices:
   • The residential property price index has experienced a notable decline, with a 13.2% drop year-on-year reported in Q1 2024, marking the ninth consecutive quarter of price decreases. This decline is attributed to rising interest rates and a chronic supply shortage
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3. Transaction Volume and Market Activity:
   • The number of property transactions has significantly decreased, with a 4.5% drop in 2023 following a 39.4% decline in 2022. In early 2024, transaction volumes further plummeted by 20.2%, indicating a cooling market amid affordability concerns
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4. Public Housing and Policy Responses:
   • The Hong Kong government has been actively working to address housing affordability through various initiatives aimed at increasing public housing supply. The Long Term Housing Strategy anticipates a substantial increase in public housing units over the next five years, which is expected to improve overall affordability conditions
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5. Youth Affordability Crisis:
   • A local think tank highlighted that purchasing power for young people has halved over the past two decades due to rising housing prices, emphasizing the growing challenge for younger generations to enter the housing market
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Conclusion

Overall, while there have been some improvements in housing affordability metrics over the past two years due to declining prices, significant challenges remain. The persistent high price-to-income ratios and ongoing supply shortages continue to position Hong Kong as one of the most unaffordable cities globally. Future research and policy efforts will need to focus on sustainable solutions that address both immediate affordability issues and long-term housing supply challenges."

My question 5: "What are the contemporary issues at the personal, family and society levels related to housing affordability in Hong Kong?"

The reply: "Housing affordability in Hong Kong presents a range of contemporary issues that impact individuals, families, and society as a whole. These issues stem from the city's status as the most unaffordable housing market globally and have significant implications across different levels.

Personal Level Issues

1. Financial Strain:
   • High housing costs consume a substantial portion of household income, often leaving little for other necessities such as food, healthcare, and education. This financial pressure can lead to increased debt and economic instability for individuals and families 
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2. Mental Health Challenges:
   • The stress associated with unaffordable housing can adversely affect mental health. Studies indicate that individuals facing housing insecurity experience higher levels of anxiety and depression, exacerbating existing health issues 
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3. Limited Homeownership Opportunities:
   • With home prices significantly outpacing income growth, many young people feel a sense of hopelessness regarding their ability to purchase homes. This has led to a generational divide where younger residents increasingly doubt their prospects for homeownership 
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Family Level Issues

1. Housing Quality and Conditions:
   • Many families are forced into substandard housing, such as subdivided flats or cramped living conditions, which can negatively impact family dynamics and children's development. Over 200,000 residents live in inadequate housing conditions, reflecting the dire state of affordable options 
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2. Intergenerational Tensions:
   • The struggle for affordable housing can create tensions within families, especially when younger generations are unable to afford to move out or start their own households. This reliance on family support can strain relationships and hinder personal growth 
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3. Impact on Children’s Education:
   • Families living in unstable housing situations may face challenges in providing a conducive environment for children's education. The stress of financial insecurity can detract from educational outcomes, perpetuating cycles of poverty 
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Societal Level Issues

1. Social Inequality:
   • The widening gap between high-income earners and low-income households exacerbates social inequality in Hong Kong. The low homeownership rate (around 51%) reflects systemic barriers that prevent equitable access to housing 
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2. Political Stability Concerns:
   • The ongoing affordability crisis has been linked to rising social discontent and instability in Hong Kong. Many view the inability to secure affordable housing as a contributing factor to broader societal frustrations and unrest 
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3. Economic Implications:
   • High housing costs deter talent retention and attract businesses, impacting the overall economic health of the city. As living expenses rise, it becomes increasingly challenging for young professionals to remain in Hong Kong, leading to potential long-term economic decline 
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In summary, the contemporary issues related to housing affordability in Hong Kong are multifaceted, affecting personal finances, family dynamics, and broader societal stability. Addressing these challenges requires comprehensive policy interventions that consider the diverse needs of the population while promoting sustainable housing solutions."

My question 6: "

What are the main academic theories employed to study housing affordability?"

The reply: "The academic study of housing affordability employs various theories to analyze and understand the complexities surrounding this issue. Here are some of the main theoretical frameworks used in this field:

1. Housing Cost Burden Theory

This theory posits that housing affordability can be assessed based on the proportion of income that households spend on housing costs. Traditionally, a household is considered to face an affordability problem if it spends more than 30% of its gross income on housing. This framework helps identify the financial strain that high housing costs impose on different income groups and is often used in policy discussions to define thresholds for affordability 

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2. Housing Cycle Theory

Housing cycle theory examines the cyclical nature of housing markets, focusing on how economic conditions, interest rates, and government policies influence housing supply and demand over time. This theory is instrumental in understanding how fluctuations in the economy can lead to periods of both affordability and unaffordability, impacting various demographic groups differently 

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3. Welfare State Theory

This theory explores the role of government policies in shaping housing markets and affordability. It emphasizes how welfare state structures influence access to affordable housing through social safety nets, public housing programs, and subsidies. The effectiveness of these interventions can vary significantly based on political and economic contexts 

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4. Land Rent Theory

Land rent theory focuses on the impact of land value and rent dynamics on housing affordability. It argues that rising land prices, driven by speculation and limited supply, contribute significantly to overall housing costs. This framework helps explain why certain urban areas experience acute affordability crises due to high land rents 

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5. Sustainable Housing Framework

This comprehensive framework considers multiple dimensions affecting housing affordability, including market conditions, regulatory regimes, sociocultural issues, and environmental factors. It emphasizes the need for integrated approaches that address not only economic factors but also social equity and sustainability in housing provision 

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6. Social Exclusion Theory

This theory examines how social factors contribute to housing unaffordability, particularly for marginalized groups. It highlights the intersectionality of income inequality, discrimination, and access to resources that exacerbate housing challenges for specific populations, such as low-income families and ethnic minorities 

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7. Behavioral Economics Perspective

This perspective incorporates psychological factors into the analysis of housing decisions, exploring how biases and heuristics influence individuals' perceptions of affordability and their choices in the housing market. Understanding these behavioral aspects can inform more effective policy interventions aimed at improving housing access 

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By employing these theories, researchers can gain a deeper understanding of the multifaceted nature of housing affordability and develop targeted strategies to address this critical issue across different contexts."

My question 7: "

What academic theories have been employed to study Hong Kong housing affordability over the last 10 years?"

The reply: "Over the last decade, various academic theories have been employed to study housing affordability in Hong Kong. These theories provide frameworks for understanding the complex dynamics of the housing market and its implications for different socioeconomic groups. Here are some of the main theories utilized:

1. Housing Cost Burden Theory

This theory focuses on the financial strain that housing costs impose on households. It is commonly used to define affordability thresholds, such as the 30% rule, which indicates that households spending more than this percentage of their income on housing are considered cost-burdened. Studies have applied this framework to assess how rising rents and property prices impact different income groups in Hong Kong, particularly the middle class and low-income families 

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2. Market Failure Theory

Market failure theory is often invoked to explain the persistent issues of housing unaffordability in Hong Kong. This theory highlights how factors such as insufficient supply, high demand from investors, and speculation create imbalances in the housing market. Research has shown that government interventions are necessary to correct these market failures and improve affordability 

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3. Social Exclusion Theory

This theory examines how social factors contribute to housing unaffordability, particularly for marginalized groups. It emphasizes that individuals facing discrimination or limited access to resources are disproportionately affected by high housing costs. Studies have explored how social exclusion impacts access to affordable housing for low-income families and ethnic minorities in Hong Kong 

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4. Welfare State Theory

Welfare state theory analyzes the role of government policies in shaping housing markets and affordability. In Hong Kong, this theory has been applied to evaluate public housing policies and their effectiveness in providing affordable options for low-income households. The Long Term Housing Strategy (LTHS) reflects a shift towards a supply-led approach to address these issues 

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5. Behavioral Economics Perspective

This perspective incorporates psychological factors into the analysis of housing decisions, exploring how biases influence individuals' perceptions of affordability and their choices in the housing market. Research has indicated that behavioral factors play a role in how residents respond to changing market conditions and government policies 

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6. Spatial Distribution Theory

Spatial distribution theory looks at how geographic factors influence housing affordability across different regions within Hong Kong. This approach helps identify disparities in access to affordable housing based on location, income levels, and other demographic factors 

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7. Sustainable Housing Framework

This framework considers multiple dimensions affecting housing affordability, including economic, social, and environmental factors. It emphasizes the need for integrated approaches that promote sustainability while addressing affordability challenges 

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These theories collectively contribute to a nuanced understanding of the complexities surrounding housing affordability in Hong Kong, guiding policymakers and researchers in developing effective strategies to alleviate the ongoing crisis."

Reference: a collection of blog notes on using chatgpt for research purpose.