Does the Difference in Urban Public Facility Allocation Cause Spatial Inequality in Housing Prices? Evidence from Chongqing, China

Linlin Zhang, Tao Zhou and Chao Mao
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Linlin Zhang: School of Construction Management and Real Estate, Chongqing University, Chongqing 400045, China
Tao Zhou: School of Construction Management and Real Estate, Chongqing University, Chongqing 400045, China
Chao Mao: School of Construction Management and Real Estate, Chongqing University, Chongqing 400045, China

Sustainability, 2019, vol. 11, issue 21, 1-20

Abstract: The current study argues that the capitalisation effect of urban public facilities on housing will be considerable when the accessibility or availability of facilities has a serious stake in the location or property rights of houses. The supply level and supply quantity of urban public facilities determine whether there is a significant difference in the accessibility or availability of facilities amongst neighbourhoods, and subsequently determines whether the capitalisation effect of facilities on surrounding houses is considerable, which ultimately affects the spatial inequality in housing prices (i.e. spatial dispersion of housing prices). However, previous studies have rarely considered the fact that the supply and demand of urban public facilities vary with the type of facilities. Thus, according to the law of diminishing marginal utility, the current study proposes a theoretical framework for the impact of the allocation of urban public facilities at different supply levels on the spatial inequity in housing prices and verifies this through a case study. Results indicate that the difference in urban public facility allocation caused by the unequal supply quantity or unbalanced spatial distribution has a notable impact on the spatial inequality in housing prices. There are three states of allocation of urban public facilities available according to different supply levels, namely, disequilibrium, quantitative equilibrium and spatial equilibrium: (I) Scarce and high-quality public resources that may always be in the disequilibrium state create a substantial capitalisation effect on nearby housing, and their presence will aggravate spatial inequality in housing prices; (II) Public facilities that can only reach the quantitative equilibrium state have a considerable capitalisation effect on nearby housing, and their supply densities have a positive impact on the spatial inequality in housing prices; (III) Public facilities in the spatial equilibrium state have a negligible capitalisation effect on nearby housing, and their supply densities have a negative impact on the spatial inequality in housing prices. Therefore, it is reasonable to argue that urban public facilities at different supply levels have a diversified impact on the housing market. This study can contribute to having a comprehensive and in-depth understanding of the diversified impact of urban public facilities on the housing market.

Keywords: urban public facility; capitalisation effect; housing price; spatial inequality; law of diminishing marginal utility (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2019
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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