Impact of Political Incidents, Financial Crises, and Severe Acute Respiratory Syndrome on Hong Kong Property Buyers

Abstract

In this paper, the first part of our study, we use a linear statistical technique to examine the impact of the announcement of China's decision to take back Hong Kong from the United Kingdom in 1982, the Tiananmen Square incident of 4 June 1989, the Asian financial crisis (AFC) of 1997, and the outbreak of severe acute respiratory syndrome (SARS) in 2003 on Hong Kong's housing market in terms of prices. A total of 11362 residential transactions from a cluster of data for a large private-housing estate, considered to be representative of Hong Kong's private residential market, were used to test four hypotheses that evaluate the impact of shocks on property prices through the use of a hedonic price model. The influences based on the statistical findings, which satisfy the relevant goodness-of-fit tests, are (a) that the sovereignty crisis exerted immediate significant negative price effect, but property prices rebounded after a big decline when open diplomatic dialogue between the Chinese and UK governments began, (b) that the Tiananmen Square (4 June) incident had no significant price effect; (c) that the AFC caused a drastic decline in property prices; and (d) that the impact of the SARS outbreak was significantly negative for Amoy Gardens but not so for estates with fewer reported SARS cases.

Impact of Political Incidents, Financial Crises, and Severe Acute Respiratory Syndrome on Hong Kong Regulators and Developers

“…This paper completes our study on the effects of four major exogenous shocks confronting Hong Kong. Whereas in our previous paper (Lai et al, 2006) we evaluated the behaviour of home buyers in terms of the property prices of two major residential estates using hedonic price modelling, in this paper we examine the decisionmaking outcomes of two development regulators (the TPB and BA) and developers using probit modelling and the Wilcoxon rank-sum test. The methods used are linear statistical techniques and their results satisfy goodness-of-fit tests.…”

“…As mentioned in the earlier paper related to this study (Lai et al, 2006), under the Conveyancing and Property Ordinance (3) all land title and associated documents, notably the contracts for sale of property, must be deposited for public inspection at the Land Registry. Anyone in the world can purchase from this registry the information of any private property in person or through electronic means.…”

“…In this paper the impacts of the four shocks (a) the announcement of China's decision to take back Hong Kong from the United Kingdom, the diplomatic negotiation that led to the 1984 Sino-British Joint Declaration; (b) the 1989 Tiananmen Square, or June 4, incident; (c) the 1997 Asian financial crisis (AFC), and (d) the 2003 outbreak of severe acute respiratory syndrome (SARS) on Hong Kong's housing and land markets will be evaluated in terms of two criteriaönamely the number of planning applications and the domestic useable floor area (UFA) involved in`consent to commence work' applications. Whereas in our earlier paper (Lai et al, 2006) we explain the historical background of the four shocks in detail and deal with the consumer or finalproduct end of the land conversion process in Hong Kong, in this paper we deal with the development-control and input end of the process, as captured by planning applications to the Town Planning Board (TPB) and building-plan submissions, respectively. As in the earlier paper, if an observable event x (a shock) is found to be statistically correlated with an observable event y (the decision pattern of a regulator or developers) then we argue that x has an impact on y.…”

Sick building syndrome and perceived indoor environmental quality: A survey of apartment buildings in Hong Kong

“…Lee et al, 2003;Tsang et al, 2003;Yu et al, 2004) but also on housing conditions and economic impact (e.g. Ho et al, 2004Ho et al, , 2007Lai, Chau, Ho, & Lin, 2006a, 2006bWong, Cheung, Yau, Ho, & Chau, 2006). However, the healthiness of apartment buildings in Hong Kong remains largely unknown.…”

Do Unexpected Land Auction Outcomes Bring New Information to the Real Estate Market?

“…The adverse impacts of disasters or pollution are expected to exert a long lasting negative impact on property prices. The impacts of exogenous events, such as political instability, financial crisis and endemic disease, on property price have also been studied with this method by Chau (1997), He et al (1998), Lai et al (2006), and Tse and Webb (2004). This approach is very different from traditional event studies, which controls for the market factor in evaluating abnormal returns brought by the event under investigation.…”