The Impacts of the Quality of the Environment and Neighbourhood Affluence on Housing Prices: A Three-Level Hierarchical Linear Model Approach

Abstract

This paper employs a three-level hierarchical linear model (HLM) to examine the impacts that the quality of the environment and neighbourhood affluence have on housing prices. The empirical results suggest that there are significant variations in the average housing price for different neighbourhoods and administrative districts. The impact of building characteristics on housing prices is subject to the moderating effects of the characteristic variables of different levels. The quality of the environment mitigates the impact of age on the decline of housing prices, and neighbourhood affluence has a positive influence with regard to the impact of age on housing prices across different levels.