Dynamic capitalization effects of educational facilities during different market stages: An empirical study in Hangzhou, China

Educational facilities have influenced residents' housing purchase decisions. Existing studies mainly constructed a cross-sectional model to obtain a static coefficient. However, the housing market in China experienced rapid development and significant fluctuations during the past decades. Such changes may influence homebuyers' valuation of educational facilities over time. In addition, the preferences of households of high-, middle-, and low-priced housing on educational facilities over the market stage have rarely been studied. To fill the gaps, this paper utilized a dataset of the housing market in Hangzhou, China from 2007 to 2019, including comprehensive building, location, neighborhood and educational characteristics. The hedonic price model, spatial lag model, spatial error model and quantile regression model were constructed. Results show that the educational capitalization significantly changes over time, and is correlated with the market stage. The implicit value of the quality of primary and secondary schools and university accessibility consistently increases in a stable market, but shows different features in market expansion. Moreover, households of high-, middle-, and low-priced housing value educational facilities differently, which is also influenced by the market stage. Varying features are found in this social heterogeneity of educational capitalization in different market stages. This study enriches existing literature by measuring the variation in educational capitalization and its social heterogeneity during different market stages. Implications are provided for future educational policymaking under particular market circumstances.