Non-local Students, Housing Demand and Rental Impact: Evidence from Mainland Students in Hong Kong

Since the late 2000s, many universities worldwide have seen a significant increase in the number of non-local students. This study examines the aggregate housing demand of those students and their impact on local rentals by using mainland students in Hong Kong as an example. The findings show that students have very different residential patterns and housing demand than other types of residents. Their income elasticity of commuting is close to 0, and they have lower income elasticity of housing demand compared with the local residents. As a group, they exhibit strong patterns of clustered living situations. By applying the differences-in-differences approach, the study finds that the average annual rental price has increased over 10% in neighborhoods with student clusters than in other comparable neighborhoods in recent years.