Neighborhood preferences of house buyers: the case of klang valley, malaysia

Tan, teck hong (2011): Neighborhood preferences of house buyers: the case of klang valley, malaysia. Published in: International Journal of Housing Market and Analysis , Vol. 4, No. 1 (March 2011): pp. 58-69.

Abstract

This paper attempts to examine the impacts of neighborhood types, as defined by a gated-guarded neighborhood with landscape compound and a freehold tenure neighborhood on residential property values in Klang Valley, Malaysia. A weighted least squares method together with a heteroscedasticity consistent covariance matrix estimator is used to estimate the coefficients of structural, locational, and neighborhood attributes of dwellings on house prices. Results show the gated-guarded neighborhood with landscape compound could increase residential property values by 18.1%. Additionally, the positive perception of a freehold property in the neighborhood could induce a price premium of 23.7%. It is reasonable to believe that neighborhood types play a role in determining residential property values. In order to meet the increasingly affluent and discerning house buyers, developers instead of just offering dream homes in prime locations, they should provide intangible benefits in the neighborhood that just as sought after by today’s house buyers, such as a sense of security in the landscape compound, a feeling of harmony with one’s surroundings, and an infrastructure which supports the lifestyle of house buyers.

• Item Type: MPRA Paper
• Language: English
• Keywords: Neighborhood types, Property prices, Klang Valley, Malaysia
• Subjects: P - Economic Systems > P2 - Socialist Systems and Transitional Economies > P25 - Urban, Rural, and Regional Economics; R - Urban, Rural, Regional, Real Estate, and Transportation Economics > R2 - Household Analysis > R21 - Housing Demand; R - Urban, Rural, Regional, Real Estate, and Transportation Economics > R2 - Household Analysis > R23 - Regional Migration ; Regional Labor Markets ; Population ; Neighborhood Characteristics

References

Arimah, B.C. (1992), “An Empirical Analysis of the Demand for Housing Attributes in a Third World City,” Land Economics, Vol. 68, pp. 366 – 379.

Bolitzer B, & Netusil, N. R. (2000), “The Impact of Open Spaces on Property Values in Portland, Oregon”, Journal of Environmental Management, Vol. 59, pp. 185 – 193.

Chin T. L, Chau K. W, and Ng F F. (2004), “The Impact of the Asian Financial Crisis on the Pricing of Condominiums in Malaysia,” Journal of Real Estate Literature, Vol. 12, pp. 33 – 50.

Choguill C. L. (2008), “Developing Sustainable Neighborhoods,” Habitat International, Vol. 32, pp. 41 – 48.

Department of Statistics Malaysia Population and Housing Census of Malaysia: Kuala Lumpur: Government Printer, 2000.

DiPasquale, D. and Glaeser E. L. (1999), “Incentives and Social Capital: Are Homeowners Better Citizens?” Journal of Urban Economics, Vol. 45, pp. 354 – 383.

Geoghegan, J. (2002), “The Value of Open Spaces in Residential Land Use,” Land Use Policy, Vol. 19, pp. 91 – 98.

Jim, C. Y. and Chen, W. Y. (2006), “Impacts of Urban Environmental Elements on Residential Housing Prices in Guangzhou (China)”, Landscape and Urban Planning, Vol. 78, pp. 422- 434.

Jim, C. Y. and Chen, W. Y. (2007), “Consumption Preferences and Environmental Externalities: A Hedonic Analysis of the Housing Market in Guangzhou”, Geoforum, Vol. 38, pp 414 – 431.

Jim, C Y and Chen, W. Y. (2009), “Value of Scenic Views: Hedonic Assessment of Private Housing in Hong Kong”, Landscape Urban Planning doi:10.1016/j.landurbplan.2009.01.009

Hui, E. C. M, Chau, C. K. Pun L and Law, M. Y, (2006), “Measuring the Neighboring and Environmental Effects on Residential Property Value: Using Spatial Weighting Matrix”, Building and Environment, Vol. 42, pp. 2333 – 2343.

Laakso, S, and Loikkanen, H.A. (1995), “Finnish Homes – Through Passages or Traps,” Real Estate Economics, Vol. 23, pp. 475 – 495.

Luttik, J. (2000), “The Value of Trees, Water and Open Spaces as Reflected by House Price in the Netherlands,” Landscape and Urban Planning, Vol. 48, pp. 161 – 167.

Lutzenhiser, M. and Netusil, N. R (2001), “The Effect of Open Spaces on a Home’s Sale Price” Contemporary Economic Policy, Vol. 19, pp. 291 – 298.

Ministry of Finance’s Valuation and Property Service Department, Property Market Report, Kuala Lumpur: Government Printer, 2007

Ministry of Finance’s Valuation and Property Service Department, Property Market Status Report, Kuala Lumpur: Government Printer, 2009

Ministry of Finance’s Valuation and Property Service Department, Property Overhang: Kuala Lumpur: Government Printer, 2006.

Moh, H. M. K., Chan, P.P.K., and Cho, Y. S. A. (1995), “Hedonic Price Model for Private Properties in Hong Kong”, Journal of Real Estate Finance and Economics, Vol. 10, pp.37 – 48.

Poudyal, N. C., Hodges D. G, and Merrett, C. D. (2009), “A Hedonic Analysis of the Demand and Benefits of Urban Recreation Parks”, Land Use Policy doi:10.1016/j.landusepol.2008.11.008

Redfearn, C. L. (2009), “How Informative Are Average Effects? Hedonic Regression and Amenity Capitalization in Complex Urban Housing Market”, Regional Science and Urban Economics, Vol. 39, pp. 297 – 306

Rohe, W. M. and Steward, L. S. (1996), “Homeownership and Neighborhood Stability”, Housing Policy Debate, Vol. 7, pp. 37 – 81.

Rossi, P. H. and Weber, E. (1996), “The Social Benefits of Homeownership: Empirical Evidence from National Survey,” Housing Policy Debates, Vol. 7 pp. 1 – 35.

Tajima, K. I. (2003), “New Estimates of the Demand for Urban Green Space: Implications for Valuing the Environmental Benefits of Boston’s Big Dig Project”, Journal of Urban Affair, Vol. 25, pp. 641 – 655.

Tan, T. H (2008), “Determinants of Homeownership in Malaysia”, Habitat International, Vol. 32, pp. 318 – 335

Tan, T. H (2010), “The Effects of Housing Characteristics on Neighborhood Stability of Homeownership”, International Journal of Business and Emerging Market, Vol.2, No. 3, pp. 286 - 304

Tiwari, P., and Parikh, J. (1998), “Affordability, Housing Demand and Housing Policy in Urban India”, Urban Studies, Vol. 35, pp. 2111 – 2129.

Tse, R. Y. C. and Love, P. E. D. (2000), “Measuring Residential Property Values in Hong Kong,” Property Management, Vol. 18, pp.366 – 374.

Tyrvainen, L. (1997), “The Amenity Value of the Urban Forest: An Application of the Hedonic Pricing Method,” Landscape and Urban Planning, Vol. 37, pp.211 – 222.

Tyrvainen, L. and Mitettinen, A. (2000), “Property Prices and Urban Forest Amenities”, Journal of Environmental Economics Management, Vol. 39, pp. 205 – 223.

Wilhelmsson, M. (2000), “The Impact of Traffic Noise on the Value of Single-Family Houses,” Journal of Environmental Planning and Management, Vol. 43, No. 6, pp. 799 – 15.