The influence of submarkets on water view house price premiums in New Zealand

Abstract

Purpose

This paper aims to evaluate the impact of submarkets on water view premiums of residential properties and investigate the correlation between submarket view premium and socio‐economic status.

Design/methodology/approach

Over 53,000 residential sales transactions from 2004 to 2006 are analysed using the hedonic method. The Auckland region is divided into 17 submarkets with similar water view scarcities. The region is analysed along with each individual submarket in order to determine if significant differences in view premiums exist.

Findings

The empirical results indicate that the regionwide model chronically over‐ or under‐estimates view premiums, for example, the regionwide model estimates that a wide water view adds 18 per cent to a home's value while the same view amenity adds only 5 per cent in modest West Harbour but 54 per cent in posh Mission Bay.

Practical implications

The study's findings can be directly applied to residential valuation practice and in particular mass appraisal systems.

Originality/value

This research fills a gap in the body of knowledge relating to water view externalities by investigating the differing price impacts across submarkets.

Citation

Filippova, O. (2009), "The influence of submarkets on water view house price premiums in New Zealand", International Journal of Housing Markets and Analysis, Vol. 2 No. 1, pp. 91-105. https://doi.org/10.1108/17538270910939583