ARCHITECTURE AWARDS AND CONSPICUOUS PREMIUM OF HOUSING

Abstract

Globalisation drives the economic growth of cities, and shapes consumption demand for conspicuous goods and services where branding plays an important role. Beyond the conspicuous demand for non-housing goods and services, conspicuous consumption on residential property assets have come into forefront. Good architecture branding sets the tone for the building, and attracts global attention and demand. While past literature focuses on the impact of architecture styles and design on housing price dynamics, there is limited study on the role of architecture branding in conspicuous consumption of housing. Therefore, this paper contends that the architecture awards, which append an outstanding brand image on the housing assets, have a significant impact on conspicuous premium of housing. To examine the effect of architecture awards, this paper proposes a combination of Propensity Score Matching and Hedonic pricing regression with Difference-in-Differences estimator. Using Difference-in-Differences regression, significantly positive “conspicuous premium” of housing prices associated with winning an architecture award are found. The price premium is a 4.71% increment and is persistent over the long-term. The estimate suggests that status conscious homebuyers are affected by the brand image of housing assets, and are willing to pay above the intrinsic value for the houses. The robustness tests, that include falsification test and clustering of standard errors, lends further support to the empirical results. Aside from the usual physical housing attributes, this paper is especially useful for real estate developers to gain a better understanding of conspicuous demand in real estate.