An empirical study to investigate the effect of landslide risk on housing prices in Hong Kong

Abstract

Landslides have long been a significant concern in Hong Kong, and with the added risk posed by climate change, residential properties in hillside regions are facing increasing threats. This dissertation aims to investigate the empirical relationship between landslide risk and residential property prices in these hillside areas of Hong Kong. By examining slopes identified as having a high risk of landslides through a government landslip prevention and mitigation programme, this study estimates the direct cost associated with slope maintenance responsibility. It also analyses the distance effect and the impact of government landslip control measures on residential properties located in close proximity to these slopes. The empirical results confirm two hypotheses and reject one. Firstly, it confirms that slope maintenance responsibility has a negative impact on residential property prices. Secondly, it demonstrates that an effective government landslip control program can help reduce the impact of natural hazards and, in some cases, even increase property prices. However, it reveals a negative relationship between the distance to slopes with a high risk of landslides and property prices, indicating that the closer a property is to such slopes, the higher its price, which is an outcome contrary to conventional expectations. These empirical findings suggest that the slope maintenance fee acts as a mechanism to absorb the exposure to landslide events in the property market, reflecting the cost associated with landslide risk. Individuals, aware of this cost, internalize it into property prices, resulting in lower prices. Furthermore, the study indicates that there is a possibility that some individuals prioritize amenities over safety concerns. The successful landslip prevention and publicity efforts undertaken by the government have gained the trust of the public regarding their enforcement capabilities. These two reasons could contribute to a dampening of price reduction or even driving up property prices. The maintenance work itself, as it does not cause significant disturbance to residents, does not negatively impact property prices. Additionally, the maintenance work conducted by the government not only ensures safety but also improves the environment and enhances the amenity value of the region, further increasing property prices. In summary, this study contributes to three main aspects. Firstly, academically, it is the first study, to the author's knowledge, that explores the relationship between landslide risks and hillside residential property prices in Hong Kong. Secondly, from a practical standpoint, it sheds light on the perception of risk among potential homebuyers and its impact on property prices. Lastly, for policy making purposes, it provides insights to the government regarding the impact of landslide risks on property prices in Hong Kong's hillside areas, and how policies and actions prioritizing slope safety can safeguard or even enhance property values in these regions.