Home • PRRES Inc. Journal • Read the Journal

Obstruction of View and Its Impact on Residential Apartment Prices

Author/s: Yu Shi Ming, Chai Chee Hian

Date Published: 1/01/2005

Published in: Volume 11 - 2005 Issue 3 (pages 299 - 315)

Abstract

The factors that influence house prices have been well researched. One of these factors is the view that can be seen from the dwelling unit, particularly high-rise units. Most studies, using multiple regression analysis, show that good views, such as sea view do enjoy a premium in value. This paper focuses on the impact of the obstruction of view on house prices. Using data from two condominium projects, the study analyses the change in price when a new condominium project, which would obstruct the existing view of units in the two condominiums, was launched. The paper uses intervention analysis to investigate the impact of the obstruction of view on property prices. The results show that the impact will set into the prices of the obstructed development once the construction of the new development begins. In addition, the results show that the impact is of a pure jump function and depresses the prices of the obstructed development by around 8% in the long term. The paper further suggests the implications of information transparency, given that planning information is widely available to developers and potential buyers in Singapore.

Download Full Article

Download the Full Article PDF

14445921.2005.11104189.pdf 14445921.2005.11104189.pdf (476kB)

Keywords

Impact on Residential Apartment Prices - Intervention Analysis - Obstruction of View - Value of View

References

  • Bausell, C.W., Jr, Rusco,. F.W, and Walls,W.D. (2001) Lifting the Alaskan Oil Export Ban: An Intervention Analysis. Energy Journal, Vol 22(4), 81–94.
  • Benson, E.D., Hansen, L.J., Schwartz, A.L., Smersh, G.T. (1998) Pricing Residential Amenities: The Value of a View. Journal of Real Estate Finance and Economics, Vol 16, 55–73.
  • Blackley, P.R. (1992). The 1987 Stock Market Crash and New York City Employment: An Intervention-Multiplier Analysis. Journal of Regional Science, Vol 32(3), 367–74.
  • Bond, M.T., Seiler, V.L, Seiler, M.J. (2002) Residential Real Estate Prices: A Room with a View. Journal of Real Estate Research, Vol 23, 129–137.
  • Box, G.E.P. and Jenkins, G.M. (1970) Time Series Analysis, Forecasting and Control, San Franciso: Holden-Day, 1970.
  • Box, G.E.P. and Tiao, G.C. (1975) Intervention Analysis with Applications to Economic and Environmental Problems. Journal of the American Statistical Association, Vol 70, 70–74.
  • Darling, A. (1973). Measuring Benefits Generated by Urban Water Parks. Land Economics, Vol 49(1), 22–34.
  • Enders,W, Sandler,T. and Cauley, J. (1990). Assessing the Impact of Terrorist-Thwarting Policies: An Intervention Time Series Approach. Defence Economics, Vol 2(1), 1–18.
  • Fomby, T.B and Hayes, K.J. (1990). An Intervention Analysis of the War on Poverty: Poverty’s Persistence and Political-Business Cycle Implications. Journal of Econometrics, Vol 43(1–2), 197–212.
  • Fox, R.T. (1996). Using Intervention Analysis to Assess Catastrophic Events on Business Environment. International Advances in Economic Research, Vol 2(3), 341–49.
  • Gillard, Q. (1981). The Effect of Environmental Amenities on House Values: The Example of a View Lot. Professional Geographer, Vol 33, 216–220.
  • Ho, A.K.F, and Wan, A.T.K. (2002) Testing for Covariance Stationarity of Stock Returns in the Presence of Structural Breaks: An Intervention Analysis. Applied Economics Letters, Vol 9(7): 441–47.
  • Hultkrantz.L. and Olsson,C. (1997) Chernobyl Effects on Domestic and Inbound Tourism in Sweden-A Time Series Analysis. Environmental and Resource Economics, Vol 9(2), 239–58.
  • Karagozoglu, A. K, Martell,. T.F, and Wang, G.H.K. (2003) The Split of the S&P 500 Futures Contract: Effects on Liquidity and Market Dynamics. Review of Quantitative Finance and Accounting, Vol 21(4), 323–48.
  • Lloyd, T, Morrissey, O. and Reed, G. (1998). Estimating the Impact of Anti-dumping and Anti-cartel Actions Using Intervention Analysis. Economic Journal, Vol 108(447), 458–76.
  • Narayan, J. and Considine, J. (1989). Intervention Analysis to Assess the Impact of Price Changes on Ridership in a Transit System: A Case Study. Logistics and Transportation Review, Vol 25(1): 53–61.
  • Plattner, R.H. and Campbell, T.J. (1978). A Study of the Effect of Water View on Site Value. Appraisal Journal, Vol 46, 20–25.
  • Rodriguez, M. and Sirmans, C.F. (1994). Quantifying the Value of a View in Single-Family Housing Markets. Appraisal Journal, Vol 62, 600–603.
  • Shao, Y.E. (1997). Multiple Intervention Analysis with Application to Sales Promotion Data. Journal of Applied Statistics, Vol 24(2), 181–91.
  • Sharma, P. and Khare, M.(1999) Application of Intervention Analysis for Assessing the Effectiveness of CO Pollution Control Legislation in India. Transportation Research: Part D: Transport and Environment, Vol 4(6), 427–32.
  • Spiegel, M. M. (1990). Capital Controls and Deviations from Proposed Interest Rate Parity: Mexico 1982. Economic Inquiry, Vol 28(2), 239–48.
  • Topping, S, Carroll,C. and Lindley, J.T. (1997). The Impact of Health Care Reform on Capital Acquisition for Hospitals. Financial Review, Vol 32(4), 751–78.
  • Yoo, K.R. (1998) Intervention Analysis of Electoral Tax Cycle: The Case of Japan. Public Choice, Vol 96, 241–58.