Evaluating the effects of blacklisting on residential property prices in Hong Kong

Research output: Journal Publications and Reviews (RGC: 21, 22, 62)21_Publication in refereed journalpeer-review

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Original languageEnglish
Pages (from-to)115 - 131
Journal / PublicationInternational Journal of Housing Markets and Analysis
Issue number2
Publication statusPublished - 2009


PurposeTo empirically examine whether public knowledge of poor conditions of multi-storey residential buildings affected the sale prices of these properties based on an analysis of panel data in Hong Kong.Design/methodology/approach Previous studies suggested that physical conditions of residential properties, particularly those concerning communal areas and services, might not be fully priced by the market because of the problem of information asymmetry. Therefore, it was envisaged that additional information pumped into the housing market could alter the price gradient between high-quality and low-quality properties. In November 2000, the Hong Kong Government publicly announced a list of poorly-performing buildings, and this study aims to study whether the blacklisting exercise brought about negative impacts on the sale prices of the affected properties. Hedonic price analysis was conducted on a set of panel data which consists of property transactions in both blacklisted and non-blacklisted buildings.FindingsThe analysis results showed that properties in blacklisted buildings were not transacted at a discount, compared with those in non-blacklisted buildings before the blacklisting exercise. Also, the release of public information on the blacklist did not create a relative diminution of the property prices of the blacklisted buildings.Research limitations/implications Thin property transactions in derelict buildings limited the number of observations for running the regression analysis.Practical implicationsThe piecemeal blacklisting exercise could not create price differential in the housing market, and thus it was not possible for the Hong Kong Government to allure homeowners to invest in their properties by market forces. The government should consider the implementation of a territory-wide building classification scheme or other alternatives to solve the problems of building disrepair.Originality/value This study is the first attempt to empirically investigate the value diminution effects of the government’s blacklisting against dilapidation buildings.Type of PaperResearch Paper

Research Area(s)

  • Multi-storey residential properties, Hong Kong, hedonic price analysis, public information, building dilapidation, Housing, Information control, Prices, Residential property