Impact of social cohesion on property prices : an empirical analysis in Hong Kong

Abstract

Hyper-dense yet overcrowded, Hong Kong’s current environment is unfavourable for sustainable development, especially since problems like social inequalities, mental health issues and housing are among the rising concerns in Hong Kong. To maintain Hong Kong’s competitiveness as an international financial hub without undermining social capital, the underexplored role of social cohesion in shaping property values is worthy of investigation. In addition to the ongoing housing affordability challenges, comprehending the impact of community ties on real estate may provide new insights to the formulation of equitable urban policy. Thus, this study aims to examine the empirical correlation between social cohesion and property values and make a contribution on how leveraging social cohesion benefits the property market. Subsequently, robustness assessments are conducted to mitigate endogeneity and confirm the statistical significance of the findings. Overall, the empirical result justified the impacts of structural and locational attributes to property price. Most importantly, it indicates a positive relationship between all neighbourhood cohesion factors and property price –– a 3.1 % of price premium is observed for highercohesion neighbourhoods. This study confirms that community participation holds an impact to property prices while supporting other indicators in having potential impacts to property prices in the Hong Kong context, highlighting the importance of exploiting social cohesion in future developments. Lastly, this study analysed how the result corresponds with trends in other locations such as the United States, Australia and New Zealand, which enhance the study’s uniqueness. Also, by citing measures in Singapore on how Singapore has utilised social cohesion to augment property value, this study provides valuable recommendations for developers and urban planners.