THE IMPACT OF CIVIL UNREST ON HONG KONG PROPERTY PRICES � EVIDENCE FROM RESIDENTIAL PROPERTY MARKET

Abstract

Hong Kong experienced the largest political turmoil and civil unrest in history. This study aims to analyse the impact of civil unrest on Hong Kong’s residential housing market. It will provide insights to the varying impact on different regions of Hong Kong and different submarkets.

Across Hong Kong, properties within the treatment area of Kowloon is the most significantly affected, with -28.3% drop in estate properties and -11.6% for single properties. Among the different housing markets, it is evident that shoebox units, often perceived as an investment property, suffered the most with -46.5% and -38.1% for both estate and single properties respectively. For family size units, the drop in average unit price within the treatment group is just as bad, -30% and -31.2% for estate and single properties respectively. Lastly, it is found that the properties in Hong Kong Island is evidently more price inelastic than any other regions due to its proximity to central business district and variety of amenities in Hong Kong Islands.

As the protest activities persist even after the Covid19 outbreak, the situation is expected to further dampen the real estate market, especially in regions where riots frequent and more so for shoe-box units, due to danger, disruption and stigma associated with the neighbourhood.