This study investigates the effects of government policy in the price determination process of retail property in Hong Kong. In the year of 2003, Hong Kong government launched a new policy named Individual Visit Scheme (IVS) under which the mainland travellers are allowed to visit Hong Kong on an individual basis. The aim of the policy is to boom the economy in Hong Kong and Macau that was severely affected by the SARS event. In this study, IVS policy is introduced for the first time as a demand driver in the price determination equation. It is found that the expensive locations of retail property react significantly stronger to the policy impact than cheap locations utilizing the empirical data in Hong Kong retail property market. However, with the passage of time, this impact on property price declines faster at the costly locations. More than 30 years data of retail property market in Hong Kong is obtained and analysed in the study. Information asymmetry theory is employed to explain the different responding behavior to external shocks in expensive and cheap locations in the price determination process of Hong Kong retail property market.