An Empirical Study of Sea View Value by Repeat Sales Method

Abstract

Sea view is almost always found to have a positive effect, whereas reclamation is believed to exert a negative effect on housing price. However, almost all the previous studies are cross sectional in nature, which cannot disentangle multicollinear factors and spillover effects; and do not directly test the impacts of reclamation works on housing price. This paper aims to test empirically in a longitudinal way the sea view value and the effects of reclamation works on housing price. Aerial photos are exploited to track the stages of the reclamation works. Contrary to the traditional belief, it finds that housing units originally with sea views were still enjoying positive premium in transaction prices after the sea had been reclaimed. It is argued that greenery view is of equal value, which can still be provided on reclaimed land. It has strong practical implication in planning and development because obstruction of sea views is often a claim for property price loss by housing owners.

Keywords: Reclamation works, Sea views, Hedonic Pricing Model, Repeat Sales

JEL Classification: B41, R22