Effects of the massive layoffs of Hong Kong airlines on residential property prices : an empirical study in Tung Chung district

Abstract

2020 is a nightmare for the major airlines in Hong Kong owing to the deterioration of the tourism. A myriad of air routes had been suspended or cancelled as the travel restriction issued by the governments had plunged the demand for air routes. The airlines in Hong Kong had suffered from the huge loss, which forced them to downsize themselves. After the layoffs of the major airlines, it is observed that the housing prices of the residential units close to the airport had dropped, especially in Tung Chung. As a result, this study is conducted with the aim of examining the effects of the massive layoffs of Hong Kong airlines on Tung Chung housing prices. Apart from Tung Chung, Tsing Yi is also a district close to the airport. It is hypothesized that Tsing Yi receive weaker effects form the massive layoffs than in Tung Chung, but stronger effects than in other districts due to the distance to the airport. For hypothesis testing, two hedonic price models are generated in this study to capture the variation of the housing prices of the flats nearby the airport. Hypothesis 1 and hypothesis 2 are proved correct, while hypothesis 3 is rejected, which indicates that the massive layoffs had only led to an immediate decline in Tung Chung housing prices. The result of the regression model also proves that the effects of the massive layoffs were eliminated after 2020. Yet, hypothesis 3 is rejected owing to the low trustworthiness of the result. The p-values of the time dummies are larger than 0.05, which is unacceptable for hypothesis testing. In addition to the regression model, a phone interview and a comparative analysis are conducted to cover the deficiency of the model. The interviewee’s arguments provide precise and reliable information regarding Tung Chung housing market in detail, which helps to illustrate the relationship between the massive layoffs and Tung Chung housing market. Moreover, the comparative analysis reveals the trend of the housing markets in Tung Chung and other districts in terms of housing prices and number of transactions, accentuating the effect on Tung Chung housing market. Overall, the result of the statistical analysis proves Tung Chung is the only area affected by the massive layoffs, with a short and immediate impact on its housing prices.