Property Price Gradients: The Vertical Dimension

27 Pages Posted: 2 Sep 2009

See all articles by Siu Kei Wong

Siu Kei Wong

University of Hong Kong

K.W. Chau

The University of Hong Kong - Ronald Coase Centre for Property Rights Research - Economics

Y. Yau

The University of Hong Kong

A.K.C. Cheung

The University of Hong Kong

Date Written: December 15, 2008

Abstract

This is an empirical study on the vertical dimension of multi-story buildings – floor level and building height. The idea of price gradients in a monocentric city was borrowed to investigate floor-level premiums, which are the price paid for the vertical location (i.e., a higher floor level) of a building. Previous hedonic price studies unequivocally showed that the floor-level premium is positive, but they were silent on whether the premium is: 1) constant across different floor levels within the same building; 2) constant across different buildings given the same floor level; and 3) neutral to the height or density of a building. The knowledge of floor-level premiums is important to developers, as it can help determine the height of their development. Based on a sample of highly homogeneous housing units in buildings of varying heights, we found that the floor-level premium was not constant, but diminished as floor level increases. Moreover, there was no significant difference in the pattern of the floor-level premium between high-rise and low-rise buildings. Finally, there was a positive and significant premium for units in low-rise buildings over those in high rise ones.

Keywords: Housing price, Hedonic model, Price gradient, Floor level, Building height

Suggested Citation

Wong, Siu Kei and Chau, Kwong Wing and Yau, Y. and Cheung, A.K.C., Property Price Gradients: The Vertical Dimension (December 15, 2008). Available at SSRN: https://ssrn.com/abstract=1465174 or http://dx.doi.org/10.2139/ssrn.1465174

Siu Kei Wong (Contact Author)

University of Hong Kong ( email )

Pokfulam Road
Hong Kong, HK
China

Kwong Wing Chau

The University of Hong Kong - Ronald Coase Centre for Property Rights Research - Economics ( email )

Ronald Coase Centre for Property Rights Research
Pokfulam Road
Hong Kong
Hong Kong
(852)28592128 (Phone)
(852)25599457 (Fax)

Y. Yau

The University of Hong Kong

Pokfulam Road
Hong Kong, Pokfulam HK
China

A.K.C. Cheung

The University of Hong Kong

Pokfulam Road
Hong Kong, Pokfulam HK
China

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