The Effect of Green Space on Housing Prices Using Hedonic Pricing Method (Case Study: Yazd city, Iran)

Document Type : Research Paper


1 Department of Environmental Sciences, School of Natural Resources & Desert studies, Yazd University, Yazd, Iran

2 Department of Economics, Faculty of Economics, Management & Accounting, Yazd University, Yazd, Iran


Nowadays, there are various environmental problems and issues in most cities of the world, especially in developing countries. The solution to these problems requires various social, economic, and political factors. The environmental valuation in different dimensions is a way to eliminate these problems. In other words, it is necessary to valuation of goods and services using appropriate methods to express environmental role and importance and convert them into monetary values.
The growth of urbanization and urban population is led to problems in the field of human habitation and land supply in most cities. Among these, land is the most basic factor of development and how to use it is one of the most important issues in urban planning. In other words, land is the main base of all citizens' activities and there is a lot of traction and demand for various activities such as providing housing, transportation, educational, commercial, medical, industrial and leisure spaces, especially in high population cities. Therefore, it is necessary to pay attention to various characteristics of the housing unit such as physical, environmental and accessibility characteristics in order to study different dimensions of housing as a heterogeneous and multidimensional commodity and to identify the affecting factors on its price. Because physical, environmental and accessibility characteristics cause differences in the tastes and preferences of heterogeneous goods consumers such as housing. There are various methods for measuring these characteristics.
One of the indirect valuation methods for the estimation of willingness to pay is determination of expressed preferences using the hedonic method, in which the value of a non-market commodity is obtained by analyzing its influence on another commodity such as housing. Therefore, the present study was conducted to investigate the effect of green space on the price of surrounding houses using hedonic valuation method.

Material and Methods
This study took place in Hafte-Tir park, Yazd city, Iran. Hafte-Tir park with approximately 5.5-ha area has been constructed in 31°51'28" to 31°51'35" latitude and 54°22'56" to 54°23'01" longitude. This park is one of the most thriving green spaces in Yazd province.
This study is a kind of survey-analytical research and is also a field study in terms of data collection. The statistical community of this study is households that live in district 4 of Yazd city, in which Hafte-Tir park is located. In the study, the hedonic valuation method was used to evaluate the effect of Hafte-Tir park on the price of surrounding houses. In this regard, 15 factors including physical, environmental, and accessibility variables have been considered. Statistics and information were collected by a questionnaire through face-to-face interviews with owners of residential units and in this regard, 80 questionnaires were collected.
In the hedonic method, it is assumed that the price reflects the willingness of its residents to pay for the facilities needed inside and outside of housing (physical and environmental factors). In other words, it is assumed that the difference in property prices is due to differences in housing characteristics. Therefore, the price of housing indicates the maximum amount of money that people are willing to pay to obtain a better quality of the environment, a certain amount of building facilities, as well as access to urban facilities and services.
In this study, it is not possible to use a completely logarithmic form of the demand function, because of the fact that some variables are qualitative and their logarithm can not be calculated. Therefore, linear and linear-logarithmic (semi-logarithmic) shapes have been chosen to estimate the hedonic housing price function. Then, in order to analyze the data, the ordinary least squares (OLS) method and EViews software have been used. In fact, the ordinary least squares method is the simplest and most common method to estimate linear regression models. The criterion of the ordinary least squares method is that coefficients should be estimated in a manner that the residual sum of squares (RSS) is minimized.

Discussion of Results
The estimation results of the hedonic price function for residential units in Yazd city using the ordinary least squares (OLS) method showed that there is a significant relationship between the total price of housing unit and five explanatory variables including land price per m2, infrastructure, parking, distance to the main street, and distance to Hafte-Tir park (P <0.05). Between the studied variables, the variable of land price per m2 has the most influence on the dependent variable (total housing price) and its effect is positive. By one percent change in land prices, the total price will change 0.95 percent.
As expected, the variables of infrastructure level had a significant positive effect on housing prices (with a coefficient of 0.89). Indeed, by one percent change in infrastructure, the total land price will change by 0.89 percent. On the other hand, the variables of parking and distance to the main street have a significant negative effect on housing price. In the absence of parking and by one meter distance to the main street, the total housing price will be reduced by 0.26 and 0.19 percent, respectively. So, it can be said that houses that are closer to the main street have higher prices due to their proximity to sales and service centers. Also, distance to Hafte-Tir park significantly affects the price of residential units (with a coefficient of 0.15). In other words, increasing one meter in the distance to park is caused increasing approximately 15 percent in housing price. Also in this study, the adjusted coefficient of determination ( ), which shows the explanatory power of the model by existing variables, indicates that 86 percent of the price changes of residential units are explained by the variables in the model.

Sample type and difference in the significance of variables are the points that make this study different from other studies. The results of the study indicate that the hedonic method is one of the methods that make a relationship between a market product such as housing and park quality by considering the effecting factors of the dependent variable. On the other hand, there are other factors than the used variables in this study that are involved in determining housing prices. Perhaps the most important of these factors are the policies and actions of national and local governments and the macroeconomic structure of the country, which are constantly causing fluctuations in housing prices.


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