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The Influence of Vintage on House Value

Author/s: Michael Rehm, Olga Filippova, Jeremy Stone

Date Published: 1/01/2006

Published in: Volume 12 - 2006 Issue 3 (pages 232 - 253)

Abstract

This research provides a significant step towards understanding the relationship between house vintage and value. This study analyses residential sales transactions in New Zealand using hedonic pricing models and uncovers evidence that a home’s vintage is a commodity that commands price premiums or discounts. Vintage is found to have a nonlinear influence on sales price and this relationship differs from market to market. In particular, wealthier markets witness a greater vintage effect, with turn-of-the-century homes realising 15% price premiums over new homes. In contrast, less wealthy markets tend to apply discounts of 20% to 40% to houses of the same vintage.

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Keywords

Hedonic Pricing Model - Heteroskedasticity - House Value - Vintage Effect

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