It comes as no surprise to me that sunshine has a value:
It is a truth commonly acknowledged that a house that gets more exposure to sunlight is more attractive, especially in ‘temperate’ climates like New Zealand’s. Until now, however, the value of that sunshine has not been calculated.
A study released today by Motu Economic and Public Policy Research Trust is the first research anywhere in the world to specifically evaluate the value buyers place on the sunshine hours received by different property.
“We found that each additional hour of direct sunlight exposure for a house per day, on average across the year, adds 2.4% to a dwelling’s market value,” said Arthur Grimes, Senior Fellow at Motu and co-author of the study.
“We know that sun is important when choosing a house. At present the impact of a building that is designed in a way that will shade its neighbour is controlled by often inflexible regulations that specify building parameters,” said Dr Grimes.
“This research is designed to put a value on sunlight, so that the change can be priced, potentially enabling compensation for affected owners and better valuation of development sites.”
The research looked at houses sold in in Wellington between 2008 and 2014. Wellington was chosen as the city is small and its local economy and housing market were stable over the study period.
“Perhaps the most important attribute of Wellington for our analysis, however, is its geographical topography and how it has intensified. It is not difficult to find houses that, while located in the same neighbourhood, have very different exposure to direct sunlight due to the effects of hills, valleys and nearby buildings,” said Dr Grimes.
“For places other than Wellington, the value of sunshine hours may be higher or lower depending on factors such as climate, topography, city size and incomes. Nevertheless, our approach can be replicated in studies for other cities to help price the value of sunlight in those settings,” said Dr Grimes.
Example: Developers are considering building a new multi-storey development that will block three hours of direct sunlight exposure per day (on average across the year) to two houses, each valued at $1 million. The resulting loss in value to the house owners is in the order of $144,000 ($1,000,000 x 2.4% x 3 x 2). Instead of regulating building heights or the site envelope for the new development, the developer could be required to reimburse each house owner $72,000. In return, the developer would be otherwise unrestricted (for sunlight purposes) in the nature of development. If the development cannot bear the $144,000 then the efficient outcome is that the development does not proceed. Conversely, if the development can bear that sum, then the socially optimal outcome is for the development to occur and, from an equity perspective, the neighbours are compensated for their loss of sunlight exposure.
I don’t think anyone could afford to pay enough for me to agree to losing some sunshine.
I was a tomato in a former life. I love the warmth and light and nothing beats the natural sort from the sun.
If I could, I’d pay more for a house with all day sun and pay to protect it.
A sunnier house costs less to heat but it’s not just the financial benefit.
A warmer house is healthier.
Where I live, it’s more important to be warm in winter than cool in summer and there’s a psychological boost from the sun.
Sunshine definitely has a value, but for me it’s a long way above a dollar one.