Is HOA capitalized in housing price? Evidence from Chongqing, China

Abstract

Purpose International research has found that Homeowners Association (HOA) is capitalized in housing price in the West. Is that result applicable in Chinese cities? In China there is also widespread applause for HOA. Will that leave trail in the housing market? This paper aims to answer these questions by presenting empirical evidence from 113 private gated communities in Chongqing, China. Design/methodology/approach The data set comes from three different sources including a telephone survey. The research methodology includes hedonic models with an endogenous dummy variable of the presence of HOA in a community. Findings HOA is not capitalized in housing price. Research limitations/implications The empirical finding helps to explain why about 80% of private communities in big Chinese cities have not formed an HOA. Originality/value This is the first empirical study on HOA capitalization in housing price in China.