The Pricing of 'Luckiness' in the Apartment Market

Abstract Previous study (Ma and Chau, 1998) suggests that superstition and taboo affect property price. People are willing to pay a premium for a 'lucky' property. In a Cantonese prevailing society such as Hong Kong, many people regard the number ‘8’ as lucky since '8' has similar pronunciation as prosperity in Cantonese. Therefore lucky floor number is a valuable attribute. Although not all Cantonese are superstitious about the luckiness of the number ‘8’, this is an added benefit that no Cantonese will reject. However such attribute of the property is intangible, as it does not carry any tangible benefit to the owner or tenant. This attribute has the characteristics of luxury goods, which are more volatile than other tangible attributes such as floor area and age. The price of such attribute is higher when the market is booming. A hedonic price model is estimated using transaction data during boom and slump of the property market. The results show that, flats with lucky floor numbers are sold at a significantly higher price during property booms but does not command a premium during property slump.