Bringing the vertical dimension into a planar multilevel autoregressive model: A city-level hedonic analysis of homebuyers' utilities and urban river attributes

Abstract

Throughout history, urban rivers have been regarded as valuable natural elements that satisfy various human needs and affect where people reside. With the increasing expansion of modern cities along the vertical dimension, how urban rivers affect housing values and homebuyers' purchasing decisions in a 3-D context has attracted a significant amount of attention from researchers, environmental practitioners, urban planners, and policymakers. In this paper, we attempt to estimate how homebuyers' utilities are affected by various river attributes and their interactions using the vibrant high-rise apartment housing market in Guangzhou (south China) as a case study. An appropriate 3-D weights matrix is identified using ex ante Monte Carlo simulation combined with ex post validation on the basis of information criteria. By using the identified 3-D spatial weights scheme in a multilevel autoregressive modelling framework, an intricate combination of multidimensional spatial heterogeneity and spatial dependence can be sufficiently accounted for. Our analytical results reveal that river view and riverfront location are considered as negative utilities by Guangzhou's homebuyers, showing the significant negative impacts of river pollution. Yet, the proximity to urban rivers is regarded as a positive utility, revealing that homebuyers enjoy a sense of being close to nature and an emotional bond with traditional water culture. The black-odorous river water itself devalues apartment prices and adds the negative utilities of river view and riverfront location. Riparian greening would command a price premium, as well as mitigate the negative utilities of river view and riverfront location. Although the availability of walking paths and sitting benches along river stretches is generally regarded as a positive utility, it may worsen the negative impact of river view, but enhance the positive impact of river proximity. These results provide deeper managerial insights into how different river attributes influence apartment buyers' utilities and thus help environmental managers (in collaboration with housing developers) design urban river restoration initiatives so as to create pleasant and attractive neighbourhoods for prospective homebuyers.

Keywords: 3-D spatial weights scheme; Apartment housing market; Hedonic price method; Multilevel autoregressive model; Urban river stretch.