Property price gradients: the vertical dimension

Abstract

This is an empirical study on the pricing of two vertical property attributes: floor level and building height. Floor level is the vertical location of a unit in a multi-storey building; the extra price paid for a higher floor level is labelled a floor-level premium. Previous hedonic price studies unequivocally showed that the floor-level premium is positive, but they were silent on whether its magnitude varies with floor levels and with buildings of different heights. Indeed, building height is a feature of a building, not its constituent units, so it is not clear whether building height alone should affect the units' prices. Based on a sample of highly homogeneous housing units in buildings of varying heights, we found that (1) the floor-level premium was not constant, but diminished as floor level increases; (2) there was no significant difference in the pattern of the floor-level premium between high-rise and low-rise buildings; and (3) there was a positive and significant premium for units in low-rise buildings over those in high-rise ones. These findings can help developers determine the optimal height and shape of their development.

Asymmetric buyer information influence on price in a homogeneous housing market

“…This is reflected in the positive and statistically significant coefficient on the indicator variable for HIGHRISE rather than the premium Wong et al (2011) found for low-rise buildings in Hong Kong. West-facing units sell for significantly less than units on the other sides of the building (similar to Li, 2004), while south-facing units garner the highest prices (similar to Shimizu et al (2010) and Choy et al (2012)).…”

“…Some of these housing characteristics are irrelevant for condominiums and others may not be appropriate for the Chinese housing market. The common physical characteristics included in hedonic equations to estimate value of condominiums include age, size, number of rooms, floor within a multi-storey building, amenities and views (Chen et al, 2011;Choy et al, 2012;Liao and Wang, 2012;Ong and Koh, 2000;Shimizu et al, 2010;Wong et al, 2011;Wu et al, 2013). Consumers are expected to pay higher prices for newer and larger units in complexes that offer better amenities.…”

“…The effect of building height, floor location and direction the unit faces on housing unit price may be ambiguous. High-rise buildings may represent prestige and offer better views; however, taller buildings also create higher population density that may result in overcrowding of common areas and resident stress (Wong et al, 2011). Higher floors within a building may provide better views, but with reduced access.…”

“…In the buildings in this development, the units on the top floor own the space above the ceiling, so they have additional space as well as prestige and the lack of an upstairs neighbour. Units on the ground floor also sell at a premium (in contrast to the discount found by Shimizu et al (2010) and Wong et al (2011)). Ground floor units of this development usually have access to a storage room or garden, so the additional amenities appear to outweigh the lack of privacy.…”

Does comprehensive redevelopment change the housing price gradient? A case study in Mongkok, Hong Kong

“…Their presence in the model is indispensible because these attributes were found to be significant determinants of property prices, particularly in Hong Kong's multi-storey resi- Does comprehensive redevelopment change the housing price gradient? A case study in Mongkok, Hong Kong dential buildings (e.g., Mok, 1995;So et al, 1997;Tse & Love, 2000;Chau et al, 2001;Wong et al, 2011). Otherwise, model misspecification will result because of the omission of these key variables from the empirical model.…”