Urban Studies, Vol. 41, No. 11, 2181–2196, October 2004 Cohort Effects, Differential Accumulation and Hong Kong’s Volatile Housing Market Ray Forrest and James Lee [Paper first received, August 2003; in final form, March 2004] Summary. As in much of east Asia, the past few decades have seen extraordinary rates of house price inflation in Hong Kong. After a relatively modest downturn in the early 1980s, prices rose rapidly until the Asian financial crisis in 1997. Since then, and despite increased government efforts to stimulate the stagnant property market, prices have continued to fall and negative equity remains pervasive. Given the centrality of property investment and speculation historically for households, financial institutions and for wider government economic strategies, the state of the residential market remains of central political and policy concern. Against this background of Hong Kong’s apparently declining economic fortunes and major shifts in housing policy, this paper explores aspects of wealth accumulation in the home-ownership sector. Linking to a well-established set of debates in the academic literature, the paper explores the impact of policy change and house price trajectories on different cohorts of households. For example, those cohorts who entered home-ownership in the late 1980s generally saw rapid increases in their property values fuelled by generous state-assisted home-ownership schemes and a buoyant economy. By contrast, those entering in the late 1990s have experienced a much less favourable policy and economic environment. The paper also explores the extent to which price trajectories have varied in different sectors. Introduction Home-ownership can be a significant con- tributor to material worth. Many households, often aided by generous state policies, have benefited from extraordinary rates of real house price inflation. This accumulation of housing wealth may be used to trade up to more prestigious properties and/or used as the credit base for other forms of consump- tion. And as home-ownership sectors mature, housing-related wealth becomes significant in inheritance and intergenerational transfers and a key factor in the dynamics of the wider economy. For individual households, how- ever, there are major cohort effects in that time of entry and choice of property may affect significantly the future trajectory of wealth accumulation and housing careers. Much of the debate and literature on these issues has been set in a Western context but arguably the accumulation of housing-related wealth has been particularly important in the east Asian context where rapid and com- pressed economic growth has contributed to high levels of house price inflation but appar- ently increasingly volatile housing markets. The Asian financial crisis left many house- holds stranded with substantial unsecured debts. Inevitably, therefore, there has been an Ray Forrest is in the School for Policy Studies, University of Bristol, 8 Priory Road, Bristol, BS8 1TZ, UK. Fax: + 44 (0) 117 954 6756. E-mail: r.forrest@bristol.ac.uk. James Lee is in the Public and Social Administration Department, City University of Hong Kong, Tat Chee Avenue, Kowloon Tong, Hong Kong. Fax: 852 2788 8926. E-mail: sakclee@cityu.edu.hk. 0042-0980 Print/1360-063X On-line/04/112181–16  2004 The Editors of Urban Studies DOI: 10.1080/0042098042000268401