Information leverage : housing market dynamics in public rehabilitation projects

Abstract

This study investigates information leverage in Hong Kong's housing market in the context of public rehabilitation projects. Analyzing transaction dynamics across two waves of public rehabilitation schemes, we find that rehabilitation projects yield positive price premiums, with a much stronger effect after completion, suggesting that market opacity and delayed information diffusion contribute to underpricing during the announcement phase. Categorizing rehabilitation intensity into Externally Observable (street-level repairs), Internally Observable (interior upgrades), and Structurally Embedded (non-visible upgrades), we uncover market asymmetries, where informed buyers, particularly those aware of Structurally Embedded Rehabilitation, strategically acquire properties at undervalued prices before these gains are realized in the housing market, leveraging their information advantage. Additionally, based on visibility network analysis of building orientation and sewage infrastructure mapping, we show information extends beyond individual transactions to shape neighborhood-wide housing market dynamics through aesthetic and amenity effects, with visual enhancement insufficient to fully account for the neighborhood effect and the limited sensitivity to distance preserving the role for information leverage.