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The Price of Aesthetic Externalities

Author

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  • Steven Bourassa
  • Martin Hoesli
  • Jian Sun

Abstract

This paper explores the prices of three aesthetic externalities (a water view, the appearance of nearby improvements, and the quality of landscaping in the neighborhood). The focus is on how the implicit prices of such characteristics change with the residential real estate cycle. Residential sales for 1986 to 1996 from Auckland, Christchurch and Wellington are examined. The findings suggest that implicit prices of the aesthetic externalities move with the real estate cycle. The findings also indicate that the percentage premiums for water views are greatest in Christchurch, which has the smallest percentage of properties with water views, and lowest in Wellington, which has the highest percentage of properties with views. An understanding of the impacts of aesthetic externalities is important for the valuation of residential properties.This article is the winner of the Real Estate Valuation manuscript prize (sponsored by The Appraisal Institute) presented at the 2004 American Real Estate Society Annual Meeting.

Suggested Citation

  • Steven Bourassa & Martin Hoesli & Jian Sun, 2005. "The Price of Aesthetic Externalities," Journal of Real Estate Literature, Taylor & Francis Journals, vol. 13(2), pages 165-188, January.
    • Handle: RePEc:taf:rjelxx:v:13:y:2005:i:2:p:165-188
    DOI: 10.1080/10835547.2005.12090160
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    Cited by:

    1. Monique DANTAS & Frédéric GASCHET & Guillaume POUYANNE, 2010. "Regulatory zoning and coastal housing prices: a bayesian hedonic approach (In French)," Cahiers du GREThA (2007-2019) 2010-12, Groupe de Recherche en Economie Théorique et Appliquée (GREThA).
    2. Guillaume POUYANNE (GREThA-GRES), 2008. "Economics of discontinuous urban development (In French)," Cahiers du GRES (2002-2009) 2008-06, Groupement de Recherches Economiques et Sociales.
    3. Chun-Chang Lee & Chih-Min Liang & Cheng-Huang Tung & Yu-Jian Lu, 2018. "The Impact of Luxury Housing on Neighborhood Housing Prices in Taipei City," Asian Economic and Financial Review, Asian Economic and Social Society, vol. 8(10), pages 1211-1225, October.
    4. Mario A. González-Corzo, 2005. "Housing Cooperatives: Possible Roles in Havana's Residential Sector," Annual Proceedings, The Association for the Study of the Cuban Economy, vol. 15.
    5. Edward W. Chen & Reagan Lengefeld & Omar Asensio, 2026. "The Positive Spillovers to Risky Investments in Vacant, Abandoned, and Disinvested Properties," NBER Chapters, in: Measurement of Housing and the Housing Sector, National Bureau of Economic Research, Inc.
    6. Tom Gillespie & Stephen Hynes & Ronan C Lyons, 2018. "Picture or Playground: Valuing Coastal Amenities," Trinity Economics Papers tep0518, Trinity College Dublin, Department of Economics, revised Mar 2019.

    More about this item

    JEL classification:

    • R31 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Housing Supply and Markets
    • R21 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Housing Demand

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