Effect of Private and Common Areas on Transaction Price for Collective Housing

Abstract

The utility of a private area in a residential building (collective housing) is higher than that of a common or shared area; thus, the price of private areas should be higher than that of common areas. However, in sales transactions, both areas are included in the price borne by the purchaser. The scope of this study was 22 residential buildings near Zhongke Shopping Plaza, Xitun District, Taichung City, and data for 2,500 transactions were analyzed. The study employed hierarchical linear models, with residential unit price as the dependent variable and private and common areas as independent variables, to explore the extent to which these types of area affect the transaction price, and the effect of each area type on the housing price was clarified. In different models, the results indicate that common and private areas have varying degrees of influence on the housing price; however, the influence of common areas is greater than that of private areas. This finding subverts traditional concepts and previous results. Keywords–collective housing, private area, common area, hierarchical linear model