The influence of environmental factors on housing transaction price in local cities in Japan

Abstract

Generally, it is considered that individual housing quality and the convenience of location are main factors when people purchase their houses. Local governments in Japan that promote housing transaction also place importance on the convenience of location, and they do not make effective policy which consider importance on other factors such as the environmental aspect of houses and housing area. This study investigated the factors that influence housing transaction prices in local cities in Japan, and the results will be expected to contribute for making local housing policy considering environmental aspects. The study analyzed recent housing transactions of some local cities located about 100 km north of the centre of Tokyo with a population from about two hundred thousand to five hundred thousand, e.g. Utsunomiya City, using open data that contains transaction prices and various attribute of residential. We estimated hedonic prices and reveal characteristics of each region considering individual housing quality, the convenience of location and the environmental factors. In addition, we conducted a questionnaire survey in multiple detached house areas in Utsunomiya City to clarify the factor of housing choice on the consumer side. The result showed that proximity from the station did not always boost house prices. Moreover, there may be an optimal building density for the city. From the results of the questionnaire, environmental factors have affected to a certain extent on consumer’s choice of housing. This study suggested that environmental factors may influence housing selection and price formation. However, information on environmental factors in residential areas is not sufficiently prepared and it is difficult for consumers and residents to obtain it. It will be necessary to prepare it and to create a framework for housing evaluation that considers not only convenience and economy but also environmental factors.