What's in a view?

The impact of views on property values has not been the specific focus of as much research as has the impact of other externalities on property values. When the impact of views is assessed, it is usually done by adding a single dummy variable to a hedonic regression equation. This paper provides a detailed literature review as well as an empirical analysis of the impact of a view on residential property values with a very rich database of nearly 5000 sales in Auckland, New Zealand. Several dimensions of a view are analyzed: type of view, scope of view, distance to coast, appearance of immediately surrounding improvements, average quality of landscaping in the neighborhood, and average quality of structures in the neighborhood. It is found that wide views of water add an average of 59% to the value of a waterfront property but that this effect diminishes quite rapidly as the distance from the coast increases. Attractive buildings in the neighborhood of a property on average add 37% to value relative to properties in neighborhoods with only average-quality structures. Particularly attractive improvements in the immediate surroundings of a property add another 27% to value on average. In contrast, properties in neighborhoods with only poor-quality landscaping on average experience a -51% impact on price. Our results lead to the conclusion that aesthetic externalities are multidimensional and can have a substantial impact on residential property values.