Hedonic analysis of property markets : theory and applications to UK cities
This thesis concerns the hedonic analysis of property markets. In particular, it investigates the extent to which such analysis can reveal household preferences for the avoidance of exposure to transport-related noise pollution. The thesis is divided into three Parts. Part 1 provides a thorough exposition of the economic theory of property markets. It contains two chapters. The first details the establishment of a market-clearing hedonic price equilibrium. The second outlines how the property market model can be used to identify measures of welfare change resulting from exogenous changes in environmental quality. As well as providing possibly the most complete and coherent exposition of this expansive and occasionally confused literature, Part 1 also contributes new insights into welfare measurement when landlords are constrained in their responses to environmental change. The following two Parts of the thesis concern empirical applications of hedonic analysis to property markets. Part 2 is concerned with the estimation of hedonic price functions for the City of Birmingham property market. The unique innovations presented here include the application of techniques for partitioning data in order to improve specification of the hedonic price function and the application of semiparametric estimators in order to redress spatial autocorrelation amongst regression residuals. Finally Part 3 of the thesis concerns itself with welfare analysis. Specifically, it provides a thorough discussion of the implications of the theory in Part 1 for empirical estimation of preference parameters. Following these empirical guidelines and drawing on results from Part 2, welfare estimates for changes in exposure to traffic-related noise pollution are provided. As far as the author is aware, these are the first welfare estimates for noise pollution to be derived from a hedonic analysis in a theoretically consistent manner.