Impact of political incidents, financial crises, and severe acute respiratory syndrome on Hong Kong regulators and developers

Abstract

We use two linear statistical techniques to examine the impact of the announcement of China's decision to take back Hong Kong from the United Kingdom in 1982, the Tiananmen Square incident of 4 June 1989, the Asian financial crisis of 1997, and the outbreak of severe acute respiratory syndrome in 2003 on Hong Kong's housing and land markets in terms of the decision patterns of the Town Planning Board (TPB), and the readiness of developers in applying to the Building Authority for 'consent to commence work'. A total of 884 sets of all cross-sectional statistics about planning applications arising from Comprehensive Development Area zones from December 1980 to August 2004 were used to test four hypotheses that evaluate the impact of shocks on the TPB through the use of a parametric technique, probit modeling. A total of 96 sets of all aggregate statistics on developers' applications for 'consent to commence work' from 1982 to 2004 were used to test yet another four hypotheses that evaluate the impact of shocks on developers using a nonparametric technique, the Wilcoxon rank-sum test. The inferences based on the statistical findings of the two sets of hypotheses, which satisfy the relevant goodness-of-fit tests, are (a) that the TPB was sensitive and responsive to these shocks in making its decisions; and (b) that developers were not sensitive to any of the shocks in terms of their readiness to build. © 2006 a Pion publication printed in Great Britain.