Top-floor discounts in residential buildings: Evidence from South Korea |
| |
Authors: | Sam Il Myoung Hwang Leo Ma |
| |
Institution: | 1. Vancouver School of Economics, The University of British Columbia, Vancouver, British Columbia, Canada;2. Moody's Analytics, Vancouver, British Columbia, Canada |
| |
Abstract: | This study assesses the phenomenon of resale price discounts for top-floor units of residential buildings, or “top-floor discounts.” Using 1.9 million resale transactions of apartment units from South Korea, we find that top-floor discounts range from 1.3% to 8.3% of resale prices. We hypothesize that top-floor discounts exist because of larger heating/cooling costs for these units relative to those on lower levels, resulting from relatively more extreme variation in indoor temperatures unique to top-floor apartment units. Using a household-level survey data on energy consumption and exploiting variations in weather conditions and roof material across time and regions throughout South Korea, we provide evidence in support of our hypothesis. |
| |
Keywords: | amenities temperature top-floor discounts vertical rent gradient |
|
|