Assessing economic, social and environmental impacts on housing prices in Hong Kong: a time-series study of 2006, 2011 and 2016.

Abstract

Given Hong Kong's unique high-density urban environment and limited land resources, more and more general public has been concerned about the living quality. Based on three waves of census data (2006, 2011 and 2016), combined with our spatial-temporal urban environmental database consisting of three local datasets of urban climate and air quality, this paper assesses the impacts of social, economic and environmental factors on the logarithm of housing prices in Hong Kong through linear regression analysis. Specifically, both supply- and demand-side economic factors have significant impacts on housing prices. Demographic factors are not as significant as expected in affecting housing prices. Transportation factors have more significant effects in the short run than in the long run. Environmental factors, including the number of hot night hours, Annual Air Quality Index (AAQI) of nitrogen dioxide (NO₂) and particulates with particle sizes less than 10 microns (PM₁₀), significantly affect housing prices over time. The results have important implications: current policy instruments to prevent housing price escalation are focused on increasing property tax or land supply (economic factors), while little attention is paid to social or environmental factors, which are geographically heterogeneous. Our findings suggest that housing provision in the New Territories may be a feasible solution to alleviate the housing crisis as its demographic pattern, transportation connectivity and air quality are significantly different from Hong Kong Island or Kowloon Peninsula. In regard to urban environmental problems brought by the high-density development in Hong Kong despite land-use saving, intensified urban infrastructure and promotion of public transportation, our study contributes to the understanding of its housing price dynamics from a more holistic perspective by comparing the impacts of economic, social and environmental factors.