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Estimating Distance Gradients for Apartment Properties

Author

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  • Bo Söderberg

    (Department of Building and Real Estate Economics, Royal Institute of Technology, 10044 Stockholm, Sweden, bosoder@recm.kth.se)

  • Christian Janssen

    (Faculty of Business, University of Victoria, Victoria, V8W 2Y2, Canada, cjanssen@uvic.ca)

Abstract

The effect of distance from the city centre on selling price, tax assessment and gross income is investigated for income property in proximity to the city centre. Hedonic estimation with a multiplicative model specification is used to estimate the relationship between property characteristics on the one hand and price, assessment and income on the other. The sample consists of centrally located apartment buildings in downtown Stockholm sold during a recent three-year period. The application is specific to Stockholm, but the methodology and the insights gained are general. The results include the estimation of price gradients for the dependent variables. The models are used for estimating the implicit capitalisation rates in the property market as a function of the distance to the centre. We also estimated where the market appears to place the city centre as implied by the observations. Although no rent gradient was found, we were able to detect a significant negative price gradient. The former is reasonable considering the rent control ordinances. The latter indicates the existence of a negative land rent gradient.

Suggested Citation

  • Bo Söderberg & Christian Janssen, 2001. "Estimating Distance Gradients for Apartment Properties," Urban Studies, Urban Studies Journal Limited, vol. 38(1), pages 61-79, January.
    • Handle: RePEc:sae:urbstu:v:38:y:2001:i:1:p:61-79
    DOI: 10.1080/00420980123880
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    References listed on IDEAS

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    Cited by:

    1. Stephen Meyer & Roger A. McCain & Paul Jensen, 2003. "Hybrid Real Estate Valuation Models with Neighborhood Effects: Marrying Geographic Information Systems and Nonlinear Econometrics," Computing in Economics and Finance 2003 17, Society for Computational Economics.
    2. Luca Stanca, 2008. "Le determinanti dei prezzi delle abitazioni: aspetti microeconomici," Working Papers 143, University of Milano-Bicocca, Department of Economics, revised Jul 2008.
    3. Arnab Bhattacharjee & Eduardo Castro & João Marques, 2012. "Spatial Interactions in Hedonic Pricing Models: The Urban Housing Market of Aveiro, Portugal," Spatial Economic Analysis, Taylor & Francis Journals, vol. 7(1), pages 133-167, March.
    4. Peter Colwell & Henry Munneke, 2009. "Directional Land Value Gradients," The Journal of Real Estate Finance and Economics, Springer, vol. 39(1), pages 1-23, July.
    5. vom Hofe, Rainer & Mihaescu, Oana & Boorn, Mary Lynne, 2017. "Do urban parks really benefit homeowners economically? Evidence from a spatial hedonic study of the Cincinnati park system," HUI Working Papers 122, HUI Research.
    6. Özge Öner, 2017. "Retail city: the relationship between place attractiveness and accessibility to shops," Spatial Economic Analysis, Taylor & Francis Journals, vol. 12(1), pages 72-91, January.
    7. Yunlong Gong & Peter Boelhouwer & Jan de Haan, 2016. "Interurban house price gradient: Effect of urban hierarchy distance on house prices," Urban Studies, Urban Studies Journal Limited, vol. 53(15), pages 3317-3335, November.

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