IMPACT OF ACCESS TO SUNLIGHT ON RESIDENTIAL PROPERTY VALUES: AN EMPIRICAL ANALYSIS OF THE HOUSING MARKET IN SHANGHAI

As an important environmental amenity, sunlight brings us a large number of benefits and improves the quality of our daily lives, and its welfare measurement depends on concrete living conditions. The purpose of this article is to empirically document the non-marketed value of sunlight in light of the view orientation of an apartment in the context of the housing market. Using a hedonic pricing model estimated with the real estate transaction data over 40,000 housing units in 2019-2021 in Shanghai, it is found that: (1) homeowners, on average, are willing to pay an extra 7.2% to choose the apartments with a high level of sunshine (facing south), relative to those with no direct access to sunlight (facing north); (2) the value of sunlight shrinks with pollution and becomes larger if living in a higher apartment; (3) residents living in higher units have a larger willingness to pay for the sunlight and environmental quality improvement. These empirical findings shed light on the welfare measurement of sunlight and have profound implications for the capitalization of environmental amenities reflected in housing prices.