Announcement of Northern Metropolis Plan Raises Housing Prices, Consumption, and School Enrolment, though Inconclusive on Inequality

24 Pages Posted: 14 Nov 2023

See all articles by Yi Fan

Yi Fan

National University of Singapore (NUS) - Sustainable & Green Finance Institute (SGFIN)

Chongyu Wang

Florida State University - Department of Risk Management/Insurance, Real Estate and Business Law

Ke Xu

the University of Hong Kong

Date Written: November 2, 2023

Abstract

Early-stage evaluation of mega projects is essential for policymaking and follow-up policy adjustment. Using an announcement of the Northern Metropolis Plan in Hong Kong on 6 October 2021 as a quasi-natural experiment, we discern its immediate impact on housing price, consumption, school enrolment, and longer-term implications on inequality. Drawing from a rich dataset spanning 38,214 housing transaction records, 4.7 million consumption records, and school enrolment data across 18 districts, our difference-in-differences estimates unveil three significant patterns. First, we find a marked 3.9% rise in housing prices in the Northern Metropolis region one year after the announcement, with a profound 6.9% surge in the initial 4 months. Additionally, we discover a swift 4.1% uptick in consumption for residents in the treated region in the same initial 4 months, predominantly within the private housing market possibly with expected housing wealth realization. Last, we observe a rise in school enrolments, mostly likely from bordering mainland China, spanning primary and secondary school levels in the subsequent year. While our findings hint at narrowing cross-region inequality in the global superstar city, they also suggest burgeoning within-region inequality, as benefits seem skewed towards private home occupants. We thus call for policy attention on the affordability and welfare of individuals with lower socioeconomic status in the Northern Metropolis region.

Suggested Citation

Fan, Yi and Wang, Chongyu and Xu, Ke, Announcement of Northern Metropolis Plan Raises Housing Prices, Consumption, and School Enrolment, though Inconclusive on Inequality (November 2, 2023). Available at SSRN: https://ssrn.com/abstract=4620663 or http://dx.doi.org/10.2139/ssrn.4620663

Yi Fan

National University of Singapore (NUS) - Sustainable & Green Finance Institute (SGFIN) ( email )

Singapore

Chongyu Wang

Florida State University - Department of Risk Management/Insurance, Real Estate and Business Law ( email )

821 Academic Way
145 RBB
Tallahassee, FL 32306
United States

Ke Xu (Contact Author)

the University of Hong Kong ( email )

Hong Kong
China

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