A Tale of Two Cities: Mainland Chinese Buyers in the Hong Kong Housing Market

Yi Fan (), Maggie Rong, Wayne Wan and Zhenping Wang

Review of Finance, 2023, vol. 27, issue 6, 2205-2232

Abstract: This article examines the impact of mainland Chinese buyers in the Hong Kong housing market, using complete transaction records between 2001 and 2017. We find that mainland buyers pay an average price premium of 1.4% compared with locals. The premiums are estimated to be 3.5% for large-sized luxury units and 1.6% for homes in central locations. The mechanisms that underlie the price premiums include a hedging effect, residential sorting, and information barriers, of which the hedging motive has the strongest impact. Mainland buyers’ price premiums rise significantly when the Chinese currency depreciates or China Economic Policy Uncertainty increases. Our study sheds light on the impact and mechanism of the ““China shock” on the global housing markets.

Keywords: Hong Kong housing market; Price premiums; Mainland buyers; Hedging effect; Residential sorting; Information barriers (search for similar items in EconPapers)
JEL-codes: F22 O18 R23 (search for similar items in EconPapers)
Date: 2023
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Citations: View citations in EconPapers (1)

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