The implications of the difference in the growth rates of the prices of building resources and outputs in Hong Kong

The prices of construction resources (construction cost) have been increasing faster than construction output prices (construction price) in Hong Kong since the mid-1970s, giving rise to a long-term divergence between the two price trends. As the difference has existed for quite a long time, it cannot be adequately explained by a short-term change in supply and demand conditions. The present paper introduces the major indices that reflect the trends of the prices of construction resources and outputs in Hong Kong. It also attempts to explain, from an economic point of view, the major factors which contributed to the divergence between the long-term trends of the prices of construction resources and outputs. One of the conclusions is that, for the past 25 years, the productive efficiency of the Hong Kong building industry has benefited from and been greatly upgraded by imported construction technologies, as well as by a burgeoning quality of human resources. The data and examples quoted in the present paper are sided towards building construction. Therefore, the scope of investigation of this paper, strictly speaking, is confined to the building industry, and does not include the building services and civil engineering subsectors. However, because of the higher degree of mechanization and faster technological progress in the civil engineering and building services subsectors, the present author believes that the results and conclusions should also be applicable to the whole construction industry.