Southward Premium: The Case of Chongqing, China

Abstract

This paper focused on the relationship between the orientation of an apartment and its property value. Firstly, we used Hedonic model to decompose the characteristic prices of an apartment, and adopted FGLS to estimate the regression parameters to avoid the adverse consequences caused by heteroscedasticity phenomenon. The empirical result shows that the orientation is not the key factor in the demander’s purchase process. Secondly, in the same community, we selected samples facing south and non-south as a test group and a control group. Through paired regression analysis, we find that in Chongqing’s second-hand housing market, compared to the apartment having no south-facing orientation, those with it on average are valued only 1.42% .It is suggested that the evaluation practice should pay more attention to the orientation characteristics and measure orientation value according to local conditions.