Feng Shui and superstition in Hong Kong’s residential housing market

ABSTRACT Many studies are undertaken in Hong Kong or elsewhere to explore the impact of Feng Shui on house values. However, most of them seemingly mix it up with numerical superstition and seldom consider genuine Feng Shui factors except water view. Others simply treat those elements as environmental attributes and miss the most essential ingredient underlying Feng Shui’s Form School approach – orientation of dwellings. Moreover, under Compass School approach, there are entirely different meaning of the digits 1 to 9. Using a local private residential estate, we collect 622 sales transactions over 2018Q1 – 2021Q3 for analysis. We encompass diverse Feng Shui variables in a log-linear hedonic model and assess their price impacts. We find that southwest is the best facing direction of houses under Period 8. Whereas sea view can fetch a price premium of 2.46%, a great discount of 6.45% has to be offered for a residence facing Sha Qi. As Sha Qi diminishes with higher floors, homebuyers are willing to pay extra 0.1% for each upper floor. Hong Kong residents appear not numerological superstitious, but they do favor certain environmental attributes in accord with Feng Shui.