Is access to public services valued differently in low- and high-end housing submarkets?

Linchuan Yang, Kwong Wing Chau and Zhu Yuan

ERES from European Real Estate Society (ERES)

Abstract: Previous research suggests that access to public services, generally, has a positive impact on housing prices. However, most, if not all, studies are silent on whether the effect varies across different housing submarkets. For example, wealthy households are likely to own cars and thus have high transportation mobility. Thus, they may not value access to public services in the same way as low-income households do. We use 22,586 second-hand housing data in Xiamen, China to test the differential impact of access to public services on housing prices in the high- and low-end submarkets. Low- and high-end housing submarkets are defined according to price. Results from estimating the hedonic pricing and spatial econometric models confirm several findings: (1) the benefits of access to most public services are capitalized in housing prices; (2) access to transit, commercial facility, education, and sports/cultural center has significantly positive impacts on house prices in the low-end housing submarket. Yet, this finding is less applicable to the high-end counterpart; (3) the effect of access to public services on housing prices varies across the two submarkets: typically, access to public services has lower positive impact for high-end properties than for the low-end ones; and (4) interestingly, access to shopping center has a larger positive impact on housing prices in the high-end housing submarket than in the low-end counterpart. Practical implications of our findings are also discussed.

Keywords: access to public services; capitalization effect; Market Segmentation; Property price; spatial econometric model (search for similar items in EconPapers)
JEL-codes: R3 (search for similar items in EconPapers)
Date: 2019-01-01
New Economics Papers: this item is included in nep-reg and nep-ure
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