The influence of violent crime on residential housing market dynamics in Hong Kong : an empirical analysis

Abstract

This research aims to explore the impact of violent knife crime on residential housing prices in Hong Kong by examining its socioeconomic causes and economic outcomes. The study is particularly investigated during 2019 to 2023 when social unrest and pandemics were prevalent. While there is different research indicating the consequences of knife crime and how it impacts housing markets, limited studies have been studied in the context of Hong Kong. Based on the change in consumption behavior due to the fear of recurrence and stigmatization of a city, this study aims to evaluate and identify the impact of how knife crime shapes the residential housing market in Hong Kong. To understand the level of impact of knife crime, this study collected the number of knife crimes reported in newspapers (HK01 and Ming Pao), residential price indices and residential transaction data to find out the impact of knife offenses on real estate dynamics. After that, attributes are introduced to the hedonic pricing model to compute the result of the analysis. The empirical findings reveal that: (1) Knife crime and residential housing prices have a negative relationship; (2) Residential housing prices are negatively correlated with knife crimes within the same month only; (3) Residential housing prices have a positive correlation within the same district; (4) The positive effect from the same districts brings to the nearby districts, but there are still negative impacts on neighborhood districts and non-neighborhood districts; (5) The involvement of ethnic minorities in a crime will not have a stronger negative impact on housing prices; (6) The effect on housing prices brought by crimes by gang members or non-gang members is similar. With the results, implications for several stakeholders such as policymakers, scholars and property developers are suggested to foster a better urban design by reducing the occurrence of knife crimes.