Abstract:
This paper aims to quantify leaky building stigma associated with monolithic claddings, explore how this stigma has likely been amplified by media coverage, estimate the number of affected properties and quantify the collective house price impact on homeowners of monolithic-clad dwellings in the Auckland Region. Residential sales transaction data organised in two subgroups (single-family houses and multi-unit dwellings) from 1997 through 2006 is analysed using a series of annual hedonic pricing models to empirically test for the presence of stigma. This is coupled with a descriptive analysis of leaky building media coverage to understand how this coverage may be influencing the stigma. The empirical results show that a leaky building stigma exists and is discounting prices of the Auckland Region,s monolithic-clad single family houses by 5 percent and multi-unit dwellings by 10 percent. Approximately 37,500 monolithic-clad dwellings have been built in the region since 1992 and their homeowners have suffered an estimated $1 billion reduction in property values due to leaky building stigma.
