Property price gradients: The vertical dimension

Kit Shing WONG, Kwong Wing CHAU, Yung YAU, Alex King Chung CHEUNG

Research output: Journal PublicationsJournal Article (refereed)peer-review

31 Citations (Scopus)

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.

Original languageEnglish
Pages (from-to)33-45
Number of pages13
JournalJournal of Housing and the Built Environment
Volume26
Issue number1
Early online date4 Dec 2010
DOIs
Publication statusPublished - Apr 2011
Externally publishedYes

Keywords

  • Building height
  • Floor level
  • Hedonic model
  • Housing price
  • Price gradient

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