What’s the Effect of Urban Villages on Commercial Housing Price? An Analysis Based on Second-Hand Housing Transactions in Beijing

Abstract

China’s rapid urbanization, characterized by large-scale rural–urban migration and radial expansion of urban built-up areas, has produced a new type of urban neighborhood, namely the chengzhongcun. With access to an unique micro second-hand housing transactions database which the number of samples is more than 20 thousands during the period from 2006 to 2011 in Beijing, and the list of the 50 key villages which was announced by the government in 2010, we first develop a hedonic housing price model to investigate whether the proximity to urban villages affects the selling price of urban housing units, and then use a DID-Hedonic model specification to examine the effect of the redevelopment project on the surrounding housing price. Controlling for the structure, other characteristics of urban housing units, the time trend and the spatial fixed effect, we find that housing prices are lower the closer the buildings are from urban villages. Further, the housing units near the villages do enjoy a higher increase in price after the announcement of the redevelopment projects. Both of the results are significant at 1 % level. This may indicate a significant negative externality of urban village to its neighbors.