We study the short-run effects of a large-scale upzoning on house prices and redevelopment premiums in Auckland, New Zealand. Upzoning significantly increases the redevelopment premium but the overall effect on house prices depends on the economic potential for site redevelopment, with underdeveloped properties appreciating relative to intensively developed properties. Notably, intensively developed properties decrease in value relative to similar dwellings that were not upzoned, showing that the large-scale upzoning had an immediate depreciative effect on pre-existing intensive housing. Our results show that the economic potential for site redevelopment is fundamental to understanding the impact of changes in land use regulations on property values.

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We present a novel approach to the estimation of hedonic imputation (HI) price indices for real estate markets using a new Mallows model averaging (MMA) estimator that is robust to spatial dependence. The spatial MMA (SMMA) method is explicitly designed to minimize the quadratic forecast loss of the imputed sales transactions that comprise the HI index when sales transactions are spatially correlated. We apply the SMMA HI approach to a sales transaction dataset for three geographic real estate suburbs of Auckland, New Zealand. The SMMA HI price indices outperform conventional OLS HI methods, exhibiting more accurate out-ofsample prediction and tighter in-sample confidence intervals. The SMMA HI method is expected to offer practitioners enhancements in constant-quality price index accuracy in data sparse environments where model overfitting is a concern, such as high frequency price measurement or highly localized geographies.

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