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What’s in a View?

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  • Steven C. Bourassa

    (School of Urban and Public Affairs, University of Louisville)

  • Martin Hoesli

    (HEC-University of Geneva, FAME and University of Aberdeen Business School)

  • Jian Sun

    (School of Urban and Public Affairs, University of Louisville)

Abstract

The impact of views on property values has not been the specific focus of as much research as has the impact of other externalities on property values. When the impact of views is assessed, it is usually done by adding a single dummy variable to a hedonic regression equation. This paper provides a detailed literature review as well as an empirical analysis of the impact of a view on residential property values using a very rich database of nearly 5,000 sales in Auckland, New Zealand. Several dimensions of a view are analyzed: type of view, scope of view, distance to coast, appearance of immediately surrounding improvements, average quality of landscaping in the neighborhood, and average quality of structures in the neighborhood. It is found that wide views of water add an average of 59% to the value of a waterfront property, but that this effect diminishes quite rapidly as the distance from the coast increases. Attractive buildings in a property’s neighborhood on average add 37% to value relative to properties in neighborhoods with only average quality structures. Particularly attractive improvements in the immediate surroundings of a property add another 27% to value on average. On the other hand, properties in neighborhoods with only poor quality landscaping on average experience a -51% impact on price. Our results lead to the conclusion that aesthetic externalities are multi-dimensional and can have a substantial impact on residential property values.

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Bibliographic Info

Paper provided by International Center for Financial Asset Management and Engineering in its series FAME Research Paper Series with number rp79.

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Date of creation: Nov 2003
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Handle: RePEc:fam:rpseri:rp79

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Cited by:
  1. Steven Bourassa & Donald Haurin & Jessica Haurin & Martin Hoesli & Jian Sun, 2007. "House Price Changes and Idiosyncratic Risk: The Impact of Property Characteristics," Working Papers 07-03, Ohio State University, Department of Economics.
  2. Erling Røed Larsen & Dag Einar Sommervoll, 2006. "The Impact on Rent from Tenant and Landlord Characteristics and Interaction," Discussion Papers 467, Research Department of Statistics Norway.
  3. Samarasinghe, Oshadhi & Sharp, Basil M.H., 2008. "Flood prone risk and amenity values: a spatial hedonic analysis," 2008 Conference (52nd), February 5-8, 2008, Canberra, Australia 6013, Australian Agricultural and Resource Economics Society.
  4. Walls, Margaret & Kousky, Carolyn & Chu, Ziyan, 2013. "Is What You See What You Get? The Value of Natural Landscape Views," Discussion Papers dp-13-25, Resources For the Future.
  5. Bauer, Dana Marie & Swallow, Stephen K., 2013. "Conserving metapopulations in human-altered landscapes at the urban–rural fringe," Ecological Economics, Elsevier, vol. 95(C), pages 159-170.
  6. K. Chau & S. Wong, 2014. "Externalities of Urban Renewal: A Real Option Perspective," The Journal of Real Estate Finance and Economics, Springer, vol. 48(3), pages 546-560, April.

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