Academic journal article Journal of Housing Research

A Geospatial Analysis of the Average Selling Price for New Apartments in Hangzhou, China

Academic journal article Journal of Housing Research

A Geospatial Analysis of the Average Selling Price for New Apartments in Hangzhou, China

Article excerpt

Abstract

This paper provides evidence on the factors that influence the average selling price of an apartment in Hangzhou, China. Geospatial mapping techniques and an unbalanced panel regression model are used to estimate the effect of externalities on the average selling price. The results show that nearness to location-specific factors such as the central business district, schools, landfills, and a major highway all have significant price impacts. The district in which an apartment complex is located also often significantly affects price. The findings reveal nonlinear relationships between the average selling price and apartment size, a time trend, and the minimum distance from a cemetery.

While spatial modeling of real estate prices has been widely applied to western cities for decades, studies of Chinese real estate markets are relatively rare. This is partly due to the country's short history of privatization in its residential housing market. Because of the rapid increase in urban residential apartment prices in China during the early twentyfirst century, it is imperative for both scholars and market developers to identify factors significantly influencing apartment prices. It is important to note that apartment prices in China would be similar to condominium prices in the United States. This study focuses on the average sales price of new residential apartments in a prosperous Chinese city, Hangzhou. With a mix of natural beauty, ancient history, and modern development, Hangzhou provides an excellent representation of the evolving Chinese urban landscape.

This study provides evidence on how the average new apartment selling price in Hangzhou is influenced by a number of location-specific factors, such as distance to the urban center, nearness to the most prestigious elementary schools, and proximity to the transit system. The findings indicate that proximity to urban amenities, such as the urban center, plays an important role in pricing; city district also influences the average apartment price in many cases. The evidence presented in this study thus yields broader interpretations for the Chinese real estate market.

One essential tool used in this study is a Geographic Information System (GIS). Thrall (1998) discusses the importance of GIS in assessing property location in the commercial and residential real estate industry. He points out that GIS produces more accurate and timely information for market participants. Additional authors such as Can (1998), Lake, Lovett, Bateman, and Day (2000), Paterson and Boyle (2002), and Kaboudan and Sarkar (2008) have employed GIS to generate variables for use in real estate studies. However, GIS has been rarely applied to real estate pricing in China. Unlike western cities, basic maps are not published in digital formats in China. The data deficit makes it hard to conduct a spatial analysis. This study uses GIS, combined with the help of the Global Position System and Google Earth, to develop a spatial distribution map of sold apartments. This allows visualization of location and detection of patterns when other maps are overlaid. GIS is also used to develop location-specific factors in this study. While many studies have used indicator variables to examine the impact of proximity to various amenities on housing prices, this study uses the actual geographic distance between the apartment complex and these amenities. This permits a more accurate estimate of their possible price influences. Overall, GIS has proven to be an important tool in mapping and analyzing real estate pricing in this Chinese city.

Literature Review

The evolution of the Chinese real estate market is documented by authors such as Wang and Murie (1996), Zhou and Logan (1996), and Wang (2000). These authors note that urban housing in China was mainly provided as welfare under the socialist regime from 1949 until the late 1970s. Over this period, apartments were distributed to urban workers with a per capita quota and only nominal rents were collected from residents. …

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