Property Prices and the Values of Amenities

Implicit hedonic prices of amenities are estimated by means of a study of the variation in house prices in Sydney, Australia. Over 1400 properties were included and were analyzed in terms of 30 independent variables. Plausible hedonic amenity prices were estimated for: 1. aircraft noise, 2. road traffic, 3. road widening, 4. railway noise, 5. the quality of the view, 6. block level, 7. the spaciousness of the roads, 8. the proximity to the sea, 9. assess to shops, and 10. the quality of the neighborhood. The hedonic prices were generally statisically significant at the 95% level, although the 2 areas in the city that were studied are among the poorest in Syndey and therefore, contain many households that might be expected to place a relatively low valuation on amenities. Hedonic amenity prices represent average willingness to pay values only if markets are assumed to be perfect and in equilibrium and if all household preferences are similiar. It is argued, however, that the demand price for amenities can be derived from hedonic prices either with plausible assumptions and survey data on market behavior and attitudes or with a fuller 2-stage econometric study. Tables