COVID-19 Impact on the Implicit Value of Open Space in High Density Cities: Evidence from the Hong Kong Housing Market

Open spaces such as parks and gardens provide a variety of ecosystem services that enhance human physical and mental well-being. Previous studies have extensively investigated the homebuyers’ willingness to pay for the utility of open space. However, few studies have investigated the price elasticity of open space to exogenous shock such as the COVID-19 pandemic. Due to massive social distancing and travel restrictions, open space within walkable distance is hypothesized to be appreciated under the pandemic, especially in high density cities like Hong Kong. Does this shock a one-off incident or create a lasting effect on price gradient? This article addresses this question by employing a multi-level difference-in-difference (DID) model based on property transaction data from 2019 to 2021 in the Hong Kong housing market, aiming to unravel the dynamic relationship between open space and residential property price during the COVID-19 pandemic. The results show that: (1) the price gap between proximate and distant properties from open space was widened, steepening the price gradient; (2) the premium effect of open space was time-varying and mainly appreciated in the later stage of the pandemic; (3) low-to-medium-wealth communities showed higher elasticity of open space to the COVID-19 pandemic than high-wealth communities; (4) the utility of open space is more appreciated in highly-infected communities. This article contributes to the juxtaposition of price elasticity, exogenous shock, and urban environments. The concerns of open space inequity and housing affordability are also raised, which calls for the policy coordination for housing, public health, and urban planning.