Improvement in
public
transportation
397
ACADEMIC PAPERS
The effects of improvement in
public transportation capacity
on residential price gradient
in Hong Kong
K.W. Chau and F.F. Ng
Department of Real Estate and Construction,
The University of Hong Kong, Hong Kong
Introduction
Hong Kong is a very densely populated city with more than 6 million people
living on a total area of 1,092km
2
. Less than 16 per cent of the total area
(approximately 170km
2
) is developed land, i.e. with artificial structures on it
(Table I).
As a result of the rapid growth in population and real economic growth,
demand for housing has been increasing sharply. Limited supply of land close
to the city centre has forced the residential area to expand sub-urban areas. In
recent years an increasing proportion of new supply of residential units are
from the New Territories (the sub-urban area of Hong Kong). In the mid-1970s,
the number of private residential units built as a percentage of total was less
than 20 per cent. By the mid-1990s, this percentage has increase to more than 50
per cent. Along with the migration of the population to the sub-urban areas is
the increase in demand for public transportation. This is evident from the
increasing trend of the percentage of people using public transportation in the
New Territories (Figure 1).
One of the major means of public transportation in the New Territories has
been the Kowloon-Canton Railway (KCR). This railway has a history of more
than 85 years. It has gone through a number of improvements and is now a
modern and efficient railway system with high passenger carrying capacity.
The most recent improvement was the electrification of KCR, which took place
in 1983. This event provides a good opportunity for us to examine the effects of
improvements in public transportation on the price gradient along the route.
Improvement in the public transportation links between urban and sub-
urban areas normally results in a shift of the population from urban to sub-
urban areas. This may affect the price gradient of properties along the
transportation line. On the one hand, this may lead to a decline in the price
Journal of Property Valuation &
Investment, Vol. 16 No. 4, 1998,
pp. 397-410, © MCB University
Press, 0960-2712
Received November 1997
Revised March 1998
The authors would like to thank Miss Y.Y. Yip for collecting the transaction data from the various
District Lands Offices and the comments by the anonymous referees.