An empirical study on the effect of mountain view on residential property prices in Hong Kong

Abstract

With around 60% of its area covered by natural slopes, Hong Kong is well known for its hilly terrain. Due to the limited land availability and high housing demands, the densely populated city brings residential buildings near mountains, resulting in a unique view in Hong Kong. This study aims to examine the relationship and extent of mountain views on residential property prices. Specifically, this study focuses on three research objectives: (1) investigating the relationship and extent of mountain view and residential property prices, (2) comparing the effect of non-green mountain view to green mountain views on residential property prices and (3) examining the relationship and impact of distance to mountain view on residential property prices. The study was based on 16,481 transaction data across the period from February 2014 to February 2024, acquired from 23 private residential estates in the representative Housing Market Area in the city. The blocks are typically multi-storey and high density. The Ordinary Least Square hedonic pricing model was employed to test for hypotheses. The empirical results supported all hypotheses, H1: Mountain view negatively influenced residential property price by depressing it by 3.55%; H2: A non-green mountain view imposes a more detrimental effect on residential property prices than a green mountain view, by decreasing it by 8.75% and 2.95% respectively; H3: Distance between mountain and units is positively correlated to residential property prices, by lifting the transaction price by 0.0232% for every metre away from the mountain. These empirical results suggest the aversion to mountain view among homebuyers in Hong Kong. The study provides valuable insights into the amenity value of mountain views and acts as a reference for policymakers, developers and homebuyers. For the government, policymakers can take into account the potential visual confinement and negative impact on property prices when formulating the land use zones, assisting in the formulation of policies that align with community expectations. For developers, they can maximize the economic benefits and desirability of their properties by optimizing the orientation of residential units. For homebuyers, they can evaluate the value proposition of properties with mountain views and make choices that align with their preferences and investment goals.