Impacts of Haze on Housing Prices: An Empirical Analysis Based on Data from Chengdu (China)

Abstract

Based on cross-section data of 20 districts in Chengdu, this article reviews the relationships between haze and housing prices with the combined application of Spatial Error Model (SEM) and Spatial Lag Model (SLM). The results illustrate that haze significantly have negative impacts on both the selling and rental prices of houses. Controlling other variables, if the air quality index rises by 0.1, the housing selling prices and rental prices will drop by 3.97% and 4.01%, respectively. Interestingly, housing rental prices have a more significant response to the air quality than housing sale prices. Residents are willing to pay a premium for better air quality and the influence of air quality is partially reflected in housing prices, which indicates that better air quality has been becoming a scarce resource with the improvement of people’s living standard. Furthermore, the impacts of haze on housing prices are also expected to lead to a “crowding out effect” in different regions. This would be detrimental for human capital accumulation and will accelerate the regional divergence in the internal economy and population structure, thus forming a region “fence” within cities.