Publication Type

Journal Article

Version

acceptedVersion

Publication Date

11-2018

Abstract

The occurrence of in-house unnatural death could negatively affect the value of housing property. This study evaluates the geographic and temporal scope of the impact of unnatural death on property values in Hong Kong. By exploiting the spatial and intertemporal variation of the shock in a difference-in-differences approach, we find significant negative externalities of unnatural death incidence on neighborhood housing values. On average, units in which an unnatural death occurred experience a 25% drop in value following the death. Nearby units on the same floor also show a significant price drop of 4.5%. Prices of units on other floors of the same building decline about 2.6%. Units in other buildings of the same estate observe a price decline of about 1% on average. However, the price for nearby estates within 300 meters shows a positive impact of 0.5%, suggesting a very localized sorting mechanism. Temporally, price evolution after death incidence follows a U shape. Housing prices continue to decline up to 4–5 years after deaths and recover gradually afterwards. We also document the heterogeneity of the impact by the type of death incidence (murder, suicide, or accident) and the type of homebuyers (local buyer, investment firm, and other buyers). We find that the negative externalities of death incidence are largely due to a severe stigma effect, rather than channels through the revealed crime risk or the price contagion effect.

Keywords

Unnatural death, Stigma effect, Housing externality, Difference-in-differences, Hong Kong

Discipline

Economics | Public Economics | Real Estate

Research Areas

Applied Microeconomics

Areas of Excellence

Urban Management and Sustainability

Publication

Regional Science and Urban Economics

Volume

73

First Page

112

Last Page

126

ISSN

0166-0462

Publisher

Elsevier

Embargo Period

4-29-2021

Copyright Owner and License

Authors

Additional URL

https://doi.org/10.1016/j.regsciurbeco.2018.08.003

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