The impact of apartment vacancies on nearby housing rents over multiple time periods: application of smart meter data

Abstract

[Purpose] This study aims to explore the spatial externalities of apartment vacancy rates on housing rent by considering multiple vacancy durations. [Design/methodology/approach] This research uses smart meter data to measure unobservable vacant houses. This study made a significant contribution by applying building-level smart meter data to housing market analysis. It examined whether vacancy duration significantly affected apartment rent and whether the relationship between apartment rent and vacancy rate differed depending on the level of housing rent. [Findings] The primary finding indicates that there is a significant negative correlation between apartment rent and vacancy duration. Considering the spatial externalities of apartment vacancy rates, the apartment vacancy rates of surrounding buildings did not show any statistical significance. Moreover, quantile regression results indicate that although the bottom 10% of apartment rent levels showed a negative correlation with all vacancy durations, the top 10% showed no statistical significance related to vacancies. [Practical implications] This study measures the extent of spatial externalities that can differentiate taxation based on housing vacancies. [Originality/value] The findings indicate that landlords have asymmetric information about their buildings compared with the surrounding buildings, and the extent to which price adjusts for long-term vacancies differs depending on the level of apartment rent.