An empirical study of the impact of vehicular traffic and floor level on property price

Urban road traffic often generates noise and air pollution, thereby resulting in a disamenity effect on surrounding residential property and subsequently affecting the willingness to pay of homebuyers. Given that the distribution of road-traffic externalities varies in vertical space, heterogeneous effects of road traffic result on properties situated in different floors. Based on data of 7590 multi-story and 4980 high-rise residential property in Hangzhou, China in 2017, this study constructs hedonic price and spatial econometric models to investigate the relationship among road-traffic externality, floor level, and property price. Empirical results show that roadtraffic externalities have a significant disamenity effect on property price. Different from existing studies, we find that the floor level has a significant moderating effect on the disamenity effect of mad traffic. In particular, effects on different submarkets reveal that capitalization rate is non-monotonic in vertical space and different in multi-story and high-rise buildings. Previous literature has largely ignored these issues, but the latter is crucial in estimating the influence of road-traffic externalities on property price.