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The price premium of heritage in the housing market: evidence from Auckland, New Zealand
Abstract
Heritage places are one of many urban features that shape the form and identity of a city. Local government regulations protect and conserve heritage but in so doing also generate restrictions or opportunity costs for homebuyers and developers. In this paper, we take Auckland, New Zealand, as case study and estimate price effects of two different forms of local government heritage protection: scheduled heritage places and Special Character Areas. We find a statistically significant price penalty of around -9.6% for houses protected for heritage values, between years 2006-2016. Yet, we also identify an external and local price premium, related to the number of heritage places around a house. This local density effect is approximately 1.7% for an additional heritage place in a radius of 50 meters around the house, and decreases as the radius under analysis expands. We also find a price premium for a house located in Special Character Areas, for which the effect is positive and reaches 4.3%. Reported effects are robust to several specifications but are highly dependent on time dynamics.
... The material cultural heritage is characterized by a wide typological variety of goods with architectural value (buildings and historical complexes, churches, properties belonging to public institutions, private properties) that have associated other values (historical, artistic, scientific and cultural) [1], [2], [3], [4], [5]. Due to these characteristics, to which authenticity and irreversibility are added, the cultural heritage buildings represent identity elements of cities [6], [7] and require their conservation and appropriate reuse [5], [8]. At the same time, heritage properties also have economic value [1], [2], [3], [4], [5]. ...
... Heritage buildings are associated with externalities that add value to local housing markets (e.g. architectural, aesthetic value, historic urban fabric) [6]. Thus, it is justified to assess the economic value of historical monuments that have associated a higher market price compared to that of ordinary unlisted properties [9]. ...
... As a result of the various forms of reuse of heritage buildings, a growing interest in evaluating the economic value of historical monuments is justified, especially in the current international context marked by intensive urban development that has generated negative effects on cultural heritage [7], [11], often faced with the choice between protection and conservation, or destruction and redevelopment [12], [13]. Often, the preservation of urban cultural heritage is seen as a barrier to urban development [7], [12], especially in the case of protected urban areas where heritage rules require the preservation and protection of heritage values, limiting the demolition, reconstruction or modification of the historical buildings [6]. These strict rules also generate high costs of preserving heritage properties. ...
Heritage buildings represent elements of territorial identity of the cities due to the multiple valences they incorporate (historical, architectural, artistic, and cultural). Due to the particular characteristics of the built heritage, multiple possibilities of reuse are associated with it. Thus, the evaluation of the economic use value of heritage buildings is justified. This work aims to evaluate the economic use value of historical monuments located in the protected urban area C.A. Rosetti-Maria Rosetti-Popa Petre, located in the central part of Bucharest. The main results of the paper reveal the fact that the multiple forms of reuse of heritage buildings in the analyzed protected urban area are under the impact of the accelerated dynamics of services (commercial spaces, office spaces, hotels). Some reuses affect the architectural value of historical monuments through interventions that involve modifying the exterior architecture or the character/valuable elements of the interior, as well as a higher regime of height than the neighborhood average, which also generates discontinuities in the historical urban fabric.
... Auckland is New Zealand's most populous city, with approximately 1.72 million residents recorded in 2021. Like many new-world cities, Auckland has a European urban history of about 180 years and its heritage is an important urban feature, despite being relatively young compared with other European cities. Planning regulations intended to protect and conserve heritage have shaped the configuration of Auckland [4]. This includes Special Character Areas (SCAs), which Land 2023, 12, 1181 2 of 16 are areas with notable or distinctive aesthetic, physical and visual qualities [5]. ...
... SCAs are similar to heritage conservation areas but are also unique, as they are managed not for their historic value, but for their amenity, appearance and the aesthetic value of the streetscape, with controls on demolition, the design and appearance of new buildings, and additions and alterations to existing buildings [4].While internationally, it is well documented that the designation of heritage conservation areas continues to be resisted by communities due to unfounded assumptions of overly strict regulations and negative impacts on property values [6]. The impact of SCA designation on property values in Auckland has not been systematically explored; nor have homeowners' experiences. ...
... With regard to historic heritage, it is among the matters of national importance listed under Section 6 of the RMA, which requires decision makers to recognise and provide for the protection of historic heritage from inappropriate subdivision, use, and development (Section 6f). Therefore, SCAs are managed for the amenity and appearance value of the streetscape, whereas historic heritage areas are managed to protect the values of the site, including the authenticity and integrity of the historic fabric [4]. ...
The importance of identifying and improving the distinctiveness of historical urban landscapes as a means of reinforcing place identity and supporting economic development has been widely acknowledged. However, research on the economic and social performance of heritage conservation areas is slow to develop, especially in New Zealand. In connection to the examination of Special Character Areas (SCAs) in Auckland, this paper seeks to quantify the value of the historical urban landscape and improve its management. A property value analysis is used to assess the impact of SCA designation on property values and an online questionnaire survey gathers information on homeowners’ experiences of living in an SCA. The results indicate that designated SCA properties have higher average values than non-designated properties and homeowners are appreciative of a sense of community and having certainty about the look and feel of their neighbourhood in the future. However, the majority of people who had gone through the processes of building and planning applications found it to be a negative experience because of the high cost in terms of time and money. A historic urban landscape approach to the development of management plans and design guidelines is recommended to improve the implementation of the Special Character Areas in Auckland and beyond.
... Auckland is New Zealand's most populous city, with approximately 1.72 million residents recorded in 2021. Auckland's heritage is an important urban feature, despite being relatively young compared with other European cities. Planning regulations intended to protect and conserve heritage have shaped the configuration of Auckland [3]. This includes Special Character Areas (SCAs), which are areas with notable or distinctive aesthetic, physical and visual qualities [4]. ...
... Heritage conservation areas are a form of heritage protection used internationally to preserve areas of special architectural or historic interest and sustain the local character of an area [5]. SCAs are similar to heritage conservation areas but are also unique as they are managed not for their historic value, but for their amenity, appearance and the aesthetic value of the streetscape, with controls on demolition, the design and appearance of new buildings, and additions and alterations to existing buildings [3]. While the impact of heritage conservation area designation on property values and homeowners' experiences is well-documented internationally, the impact of SCA designation on property values in Auckland has not been widely explored, nor the level of satisfaction of homeowners living in these areas. ...
... With regard to historic heritage, it is among the matters of national importance listed under section 6 of the RMA, which requires decision makers to recognise and provide for the protection of historic heritage from inappropriate subdivision, use, and development (section 6f). Therefore, SCAs are managed for the amenity and appearance value of the streetscape, whereas historic heritage areas are managed to protect the values of the site including the authenticity and integrity of the historic fabric [3]. ...
Heritage conservation area designation is often resisted by communities due to concerns with overly strict regulations for property alterations and negative impacts on property values. This paper addresses these concerns by examining Freemans Bay and Onehunga – two Special Character Areas (SCAs) in Auckland, New Zealand. A property value analysis was used to assess the impact of SCA designation on property values and an online questionnaire survey gathered information on homeowners’ experiences and levels of satisfaction with living in an SCA. The results indicate that designated SCA properties have higher average values than non-designated properties and homeowners are overwhelmingly satisfied with living in a SCA. The main benefits are a sense of community and having certainty around the look and feel of their neighbourhood into the future. The main issue identified by respondents is the requirement for Resource Consent. The majority of people who had gone through the process found it to be a negative experience because of the high cost in terms of time and money. A historic urban landscape approach to the development of management plans and design guidelines is recommended to improve the implementation of the Special Character Areas in Auckland and beyond.
... Under the influence of various types of capital investment and heritage protection management, the production methods of heritage communities have evolved and differentiated [13]. This feature is also reflected in the spatiotemporal evolution of housing and land prices before and after heritage protection and utilization [14,15]. In terms of the social dimension, the process of cultural heritage utilization is led by the government, and spatial resources are coordinated through planning, public investment, and policy formulation, which involve various measures, such as relocation, resettlement, and compensation [16,17]. ...
Affected by multiple factors, differentiated capital investment and power games have led to the uneven regional development of rural areas at cultural heritage sites. Therefore, it is urgent to reflect on the spatial equity and justice of heritage sites from the perspective of social space. This study took the territorial function of rural areas (TFRA) as its research objective, utilizing the UNESCO World Cultural Heritage Site—the Qinshihuang Mausoleum—and the Qianling Mausoleum and the Qiaoling Mausoleum in Shaanxi Province as cases. Based on the theory of spatial production, an index system of TFRA was constructed using social and spatial dimensions. Factor analysis and social–spatial differentiation indices were employed to identify the spatial structure and differentiation of TFRA. The results show the following: (1) the case areas reflect eight principal components, and these components have obvious spatial differentiation characteristics; (2) the principal components related to heritage display and utilization have had a sustained impact over the past decade, which have driven the development of related industries, but the scores of principal components related to the restrictions of heritage protection have been decreased; (3) six functional type zones are designated, and the spatial pattern of TFRA presented a concentric circle with a core-periphery structure, which is influenced by heritage protection zoning; (4) high-value-added functional spaces form and expand along transportation lines; (5) the inherent demand for capital proliferation is the fundamental driving force for the differentiation and evolution of TFRA at heritage sites. Based on the results of the above analysis, strategies of coordinated development between society and space are proposed to address the issue of uneven regional development at heritage sites.
... Andersson, Kopsch, and Palm [34] claimed that homes near buildings with a high cultural value would sell at a 1% premium. Bade et al. [35] also found that for each cultural monument or landmark within 50 m, 100 m, and 200 m of a house, there was a price premium of 1.7%, 1.4%, and 0.5%, respectively. ...
Street art is promoted in most countries to intensify the cultural elements of the cityscape. Although street art provides cultural and social values, its impact on the prices of prewar historic property is still unknown. Therefore, an empirical study that examines the relationship between prewar shophouse prices and street art is needed to improve real estate professionals’ understanding of the historic preservation market. Using pre- and post-models for the years 2009 to 2019, this study systematically determined the actual location of 119 street art objects (in the form of sculptures and murals) and the 852 prewar shophouses sold in George Town, Penang. The price change of prewar shophouses correlates with the number of street art objects within 100 m, 500 m, and 1000 m of the properties. Due to the heterogeneous characteristics of the properties, six primary hedonic models were developed to extract the price premium of street art. This study has shown the impact of street art on a prewar commercial building, where an additional unit of sculpture could increase its price by 8.32%, 1.62%, and 0.74%, based on radii of 100 m, 500 m, and 1000 m, respectively, in the post-model (after 2012–2019). However, a mural painting has no significant effect on the price change of prewar shophouses. In addition, the position of street art (representing visibility) in the model was tested. The result shows that, unlike sculptures that were located at the back of prewar houses, such street art effects contributed positively to the price premium when they were located at the front of the buildings, with each additional unit of sculpture increasing the price premium of prewar houses by 1.13%. Sculptures as street art thus created a positive externality for the city, particularly with respect to the price premium for prewar shophouses.
Divergent visions for urban form are currently contesting the future of cities in Aotearoa. Severe pressures of population growth, inadequate housing supply, and unsustainable transport systems are raising a spectrum of voices on the appropriate planning response. The heritage field is enfolded in these debates, as intensification pressures have amplified questions about the value of historic urban fabric and the planning mechanisms that sustain it. To what extent should cities’ existing areas be retained or developed, and who gets to decide? Focusing on the “soft edge” of heritage—early suburbs valorised as “special character”—the paper traces the history of heritage-making in urban Aotearoa and its role in maintaining the ontological security of the settler state. It first explores the processes of identifying and managing historic urban forms that have gradually evolved through Aotearoa’s planning legislation, from the early town planning acts to the Resource Management Act 1991. It then analyses the tension between contemporary urban planning directions and historic places conservation, exploring the concept of “amenity,” which is implicated in both. It concludes with some avenues for deeper collaboration between planning policy and heritage-making for more spatially and culturally equitable cities.
Although interest in sensory atmospheres and urban ambiences has been growing in urban studies, little is known about the economics of such ambiences. In architecture research, urban atmospheres or ambiences have been studied qualitatively through surveys and interviews. So far, the value of ambience has been focused and quantified only for heritage buildings. However, non-heritage buildings and open spaces also shape urban ambiences, either positively or negatively. This paper seeks to empirically disentangle cohort ambience effects on house prices based on the proportion of various house cohorts to the total number of houses within either a 0.5 km or a 1.0 km radial circle. Based on more than 56,000 housing transactions from 2010 to 2019 in Auckland, New Zealand, the results confirm that houses in a neighbourhood with historic ambience have a premium of more than 20%, ceteris paribus. This finding opens up a new research agenda on the economics of architectural aesthetics and suggests that there should be further studies of the price effects of various types of urban ambiences. The results may also have important implications for architects, urban planners and government officials conducting cost-benefit analyses.
In the fight against the COVID‐19 pandemic, New Zealand stood out with its ambitious elimination goal and the small death count per capita. The country’s strategy included full lockdown measures that were strict by international standards. In this paper we investigate whether New Zealand’s strict lockdowns brought significant changes to the dwelling price capitalisation of environmental amenities. Our results show a nuanced landscape. While before the pandemic, Auckland homebuyers were willing to pay a premium for dwellings located adjacent to open spaces, such premium either vanished or became a penalty during the lockdown phases. There was also a significant premium for dwellings within 300 m of beaches. But again such premium either decreases or becomes a penalty across the lockdown phases. In addition, we find a preference for dwellings located further away from Auckland CBD. Hence, some amenities that used to have a positive (or neutral) impact on the price of a property have now become disamenities from homebuyers’ perspective after the experience of the pandemic. This paper informs planners, policy‐makers and private actors with a better understanding of the behaviour of Auckland’s housing market under the disruptions due to the pandemic and lockdowns.
We develop and test a simple theory of the conservation area designation process in which we postulate that the level of designation is chosen to comply with interests of local homeowners. Conservation areas provide benefits to local homeowners by reducing uncertainty regarding the future of their area. At the same time, the restrictions impose a cost by limiting the degree to which properties can be altered. In line with our model predictions we find that an increase in preferences for historic character by the local population increases the likelihood of a designation, and that new designations at the margin are not associated with significant house price capitalisation effects.
Problem: Over the past several decades, inclusionary zoning (IZ) has become an increasingly popular, but sometimes controversial, local means of producing affordable housing without direct public subsidy. The conversation about IZ has thus far largely ignored variations in the structure of IZ policies, although these variations can impact the amount of affordable housing produced and the effects of IZ on production and prices of market rate housing.Purpose: We provide a detailed comparison of the ways in which IZ programs have been structured in the San Francisco and Washington metropolitan areas and in suburban Boston.Methods: We create a unique dataset on IZ in these three regions by combining original data collected from several previous surveys. We use these data to compare the prevalence, structure, and affordable housing output of local IZ programs.Results and conclusions: In the San Francisco Bay Area, IZ programs tend to be mandatory and apply broadly across locations and structure types, while including cost offsets and alternatives to onsite construction. In the Washington, DC, area, most IZ programs are also mandatory, but have broader exemptions for small developments and low-density housing. IZ programs in the Boston suburbs exhibit the most heterogeneity. They are more likely to be voluntary and to apply only to a narrow range of developments, such as multifamily housing, or within certain zoning districts. The amount of affordable housing produced under IZ varies considerably, both within and across the regions. There is some evidence that IZ programs that grant density bonuses and exempt smaller projects produce more affordable housing.Takeaway for practice: Although variation in IZ program structures makes it hard to predict effectiveness, IZ's adaptability to local circumstances makes it a particularly attractive policy tool. IZ programs can easily be tailored to accommodate specific policy goals, housing market conditions, and residents' preferences, as well as variations in state or local regulatory and political environments.Research support: This article is adapted from a longer working paper written with financial support from the Center for Housing Policy, the research affiliate of the National Housing Conference.
Does the housing market reflect cultural heritage? We estimate several specifications of a hedonic price equation to establish whether distance to cultural heritage site is capitalised into housing prices in Greater Dublin, Ireland. The results show that distance to the nearest historic building has a significant and robust effect on housing prices. To our knowledge this is the first application of the hedonic price method to cultural heritage. Acknowledgements We thank Kathryn Graddy, Stephan Heblich, Ian Lange and Chris Timmins for comments. Thanks also to the Scottish Institute for Research in Economics for a research grant (Moro). ESRI working papers represent un-refereed work-in-progress by researchers who are solely responsible for the content and any views expressed therein. Any comments on these papers will be welcome and should be sent to the author(s) by email. Papers may be downloaded for personal use only.
Designation of historic districts is increasingly used as a tool to revive or halt the deterioration of central-city neighbourhoods. While historic designation is generally thought to have a positive impact on property values, evidence on this issue is mixed. One limitation of previous research is that it typically focuses on historic neighbourhoods in one city and thus bases its conclusions on a very limited sample. This study expands upon previous work by examining the effects of designation on property values across a larger set of cities. The study employs hedonic regression models to estimate housing prices in historic districts and comparable neighbourhoods in nine Texas cities. Results suggest that, in most cases, historic designation is associated with higher property values.
It is often conjectured that artistic, bohemian and gay populations increase housing values in the neighborhoods and communities
in which they reside. But these groups are small, and the evidence of their effect on housing prices is anecdotal and limited.
We argue that artists, bohemians and gays affect housing values through two kinds of mechanisms: an aesthetic-amenity premium; and a tolerance or open culture premium. To examine this, we introduce a combined measure of bohemian and gay populations—the Bohemian-Gay Index. We conduct statistical
analyses to test the performance of this measure against other variables expected to affect housing values—income, wages,
technology and human capital. The findings indicate that the Bohemian-Gay Index has a substantial direct relation with housing
values across all permutations of the model and across all region sizes. It remains positive and significant alongside variables
for regional income, wages, technology and human capital. The Bohemian-Gay Index also has a substantial direct correlation
with other key variables, particularly income, indicating an additional indirect effect on housing values.
Housing market cycles are featured by a positive correlation of prices and trading volume, which is conventionally attributed
to a causal relationship between prices and volume. This paper analyzes the housing markets in 114 metropolitan statistical
areas in the United States from 1990 to 2002, treats both prices and volume as endogenous variables, and studies whether and
how exogenous shocks cause co-movements of prices and volume. At quarterly frequency, we find that, first, both home prices
and trading volume are affected by conditions in labor markets, the mortgage market, and the stock market, and the effects
differ between markets with low and high supply elasticity. Second, home prices Granger cause trading volume, but the effects
are asymmetric—decreases in prices reduce trading volume, and increases in prices have no effect. Third, trading volume also
Granger causes home prices, but only in markets with inelastic supply. Finally, we find a statistically significant positive
price–volume correlation; which, however, is mainly explained by co-movements of prices and volume caused by exogenous shocks,
instead of the Granger causality between prices and volume.
Using a hedonic property price approach,we estimate the amenity value associated with proximity to habitats, designated areas, domestic gardens and other natural amenities in England. There is a long tradition of studies looking at the effect of environmental amenities and disamenities on property prices. But, to our knowledge, this is the first nationwide study of the value of proximity to a large number of natural amenities in England. We analysed 1 million housing transactions over 1996–2008 and considered a large number of environmental characteristics. Results reveal that the effects of many of these environmental variables are highly statistically significant, and are quite large in economic magnitude. Gardens, green space and areas of water within the census ward all attract a considerable positive price premium. There is also a strong positive effect from freshwater and flood plain locations, broadleaved woodland, coniferous woodland and enclosed farmland. Increasing distance to
natural amenities such as rivers, National Parks and National Trust sites is unambiguously associated with a fall in house prices. Our preferred regression specifications control for unobserved labour market and other geographical factors using Travel to Work Area fixed
effects, and the estimates are fairly insensitive to changes in specification and sample. This provides some reassurance that the hedonic price results provide a useful representation of the values attached to proximity to environmental amenities in England. Overall, we conclude
that the housing market in England reveals substantial amenity value attached to a number of habitats, designations, private gardens and local environmental amenities.
Many local governments are adopting inclusionary zoning (IZ) as a means of producing affordable housing without direct public subsidies. In this paper, panel data on IZ in the San Francisco metropolitan area and suburban Boston are used to analyse how much affordable housing the programmes produce and how IZ affects the prices and production of market-rate housing. The amount of affordable housing produced under IZ has been modest and depends primarily on how long IZ has been in place. Results from suburban Boston suggest that IZ has contributed to increased housing prices and lower rates of production during periods of regional house price appreciation. In the San Francisco area, IZ also appears to increase housing prices in times of regional price appreciation, but to decrease prices during cooler regional markets. There is no evidence of a statistically significant effect of IZ on new housing development in the Bay Area.
In the valuation of the effect of improved air quality through the estimation of hedonic models of house prices, the potential
“errors in variables” aspect of the interpolated air pollution measures is often ignored. In this paper, we assess the extent
to which this may affect the resulting empirical estimates for marginal willingness to pay (MWTP), using an extensive sample
of over 100,000 individual house sales for 1999 in the South Coast Air Quality Management District of Southern California.
We take an explicit spatial econometric perspective and account for spatial dependence and endogeneity using recently developed
Spatial 2SLS estimation methods. We also account for both spatial autocorrelation and heteroskedasticity in the error terms,
using the Kelejian–Prucha HAC estimator. Our results are consistent across different spatial weights matrices and different
kernel functions and suggest that the bias from ignoring the endogeneity in interpolated values may be substantial.
Special Character Areas (SCAs) in Auckland, New Zealand, are areas with distinctive aesthetic, physical and visual qualities. Preservation policies entail controls on the design and appearance of new buildings, and on demolition, additions and alterations to existing buildings. To promote densification of the city, the Auckland Unitary Plan (AUP) removed SCA preservation rules in certain areas. This article assesses the trade-off between SCA preservation and housing development. We employ hedonic prices models to about 85,000 sale transactions between 2012 and 2016 and find that in 2012, the SCA price premium was 11.4% whereas the premium on upzoned properties (those with increased development allowances under the AUP) was zero. Over time, the SCA premium decreases, and by 2016 it was down to about 4.3%. At the same time, upzoning premiums increased to about 5% in 2016. These results reveal a demand shift from the protections of SCA towards flexibility on the development options of land.
The value of environmental amenities has been studied for decades in the hedonic housing prices literature. Numerous studies have found that amenities such as marine, river and woodland habitats, national and regional reserves, urban parks, or wetlands contribute positively on the formation of housing prices. Work is scarce when considering heterogeneity across submarkets and time. Auckland, New Zealand’s largest city, has a unique landscape with open spaces, waterways, coastal areas and volcanic features. Local housing market is highly segmented and the city has gone through a bust, recovery and boom cycle in the last decade. This paper incorporates heterogeneity across submarkets and time, and examines how they affect the capitalisation of amenities into housing prices. We construct a dataset of about 280 thousand sale transactions between 2000 and 2016 in Auckland and estimate hedonic models based on unconditional quantile regressions. We find diverse capitalisation patterns across housing submarkets. Beaches may add price premiums of 5.1% in houses in the upper-end of the distribution, but also price discounts of 2.1% in houses in the lower-end of the distribution. We use a detailed categorisation of parks and find that volcanic parks may add premiums for houses in the 70% percentile and above of the price distribution, but also imply price discounts values for houses around the median price and below. We argue that the differing effects occur because of trade-offs between regulations to protect amenities and the ecosystem services they provide, conditional to specifics of the location of houses.
Housing prices in Auckland have persistently increased in the last decade. To fast-track development of housing, Special Housing Areas (SHAs) were created in September 2013 as a measure to improve affordability. It is not clear the extent of the success (or failure) of SHAs as they were disestablished by May 2017. This paper investigates the causal effects of the SHAs programme on housing prices and the implications on affordability. We used a dataset comprising more than 170 thousand sales transactions between 2011 and 2016 in Auckland. Our approach consists of a Difference-in-Difference approach where the treatment consists of tranches of land designated as SHAs. Our results indicate that the SHAs caused an average price increase of approximately 5% and did not contribute to increases in the likelihood of affordable transactions. These findings are robust across several specifications and question the effectiveness of the SHAs on improving affordability.
We estimate the cultural heritage amenity impact on the residential real estate market of Lisbon, Portugal, paying particular attention to heterogeneity of types and capturing spatial dependencies through a spatial error model. Our heritage amenities include conservation areas, listed historic buildings, and designated heritage which includes churches, palaces, historic buildings and lithic structures. We construct gridded spatial fixed effects which mitigate biases from the modifiable areal unit problem, and further employ a geographic regression discontinuity ensuring the robustness of results. The analysis is complemented with spatial interactions and mixed geographically weighted regressions (MGWR) to explore spatial heterogeneity of impacts.
Conservation areas yield 4.1% premiums with spillover benefits of 3.3%, while proximity to designated heritage has a positive price elasticity of 0.0075. This impact is equivalent to an additional designated heritage within 100 meters. Ten additional listed buildings within 500 meters on the other hand yield 0.5% premiums.
We find spatial variation in heritage amenity impacts with MGWR and spatial interactions highlighting common patterns whereby positive price impacts are strongest for the closest properties, and the biggest for landmark amenities. We compare these two manners to evaluate spatial non-stationarity of impacts and highlight the benefits of high-level GIS techniques which are commonly lacking in hedonic studies with urban spatial data.
We study the economic effects of public investments in historic amenities by looking at their impact on house prices. We distinguish between direct and indirect effects of investments. A nationwide housing transaction is used as well as data on investments in cultural heritage. A 1 million euro per square kilometre increase in investments in cultural heritage leads to a price increase of 1.5–3.0% of non-targeted buildings. We do not find evidence that the maintenance state of non-eligible properties is improved, suggesting that any price effect due to investments in cultural heritage is a direct effect of investments.
Decisions about cultural and historical heritage conservation can be contentious. Improved insight into the economic benefits derived from preservation could be achieved through a better understanding of the underlying economics. In response to this challenge, a growing number of studies estimate the economic value of heritage sites. The purpose of this study is to identify common drivers of the economic value of cultural and historical heritage by conducting a meta-analysis of heritage valuation studies. We find that heritage sites in areas with higher population density hold higher value, and conservation that supports adaptive re-use of sites generates higher values then passive protection. Valuation studies of tangible heritage dominate our dataset, but our findings are robust across model specifications. We identify a need for more economic and interdisciplinary research on the value of non-built heritage to improve understanding of the composition and drivers of heritage value.
Since Brooklyn Heights was designated as New York City's first landmarked neighborhood in 1965, the Landmarks Preservation Commission has designated 120 historic neighborhoods in the city. This paper develops a theory in which landmarking has heterogeneous impacts across neighborhoods and exploits variation in the timing of historic district designations in New York City to identify the effects of preservation policies on residential property markets. We combine data on residential transactions during the 35-year period between 1974 and 2009 with data from the Landmarks Preservation Commission on the location of the city's historic districts and the timing of the designations. Consistent with theory, properties just outside the boundaries of districts increase in value after designation. Further, designation raises property values within historic districts, but only outside of Manhattan. As predicted, impacts are more positive in areas where the value of the option to build unrestricted is lower. Impacts also appear to be more positive in districts that are more aesthetically appealing.
Does the designation of a heritage conservation area have a significant effect on house values? Previous studies, almost all based on American data, do not provide a simple answer to the question. Using data on the sales prices of houses in St. John's, the capital city of the province of Newfoundland and Labrador, this paper attempts to determine whether the creation of a Heritage Conservation Area in 1977 enhanced the value of houses within it. The City's abandonment of controls on building materials complicates the analysis. However, the conclusion is that there is no clear heritage premium. The reason for this may be the absence of clearly defined, rigorously enforced heritage conservation regulations. Copyright © 2006 by the Institute of Urban Studies All rights of reproduction in any form reserved.
We consider statistical inference for regression when data are grouped into clusters, with regression model errors independent across clusters but correlated within clusters. Examples include data on individuals with clustering on village or region or other category such as industry, and state- year differences- in- differences studies with clustering on state. In such settings, default standard errors can greatly overstate estimator precision. Instead, if the number of clusters is large, statistical inference after OLS should be based on cluster- robust standard errors. We outline the basic method as well as many complications that can arise in practice. These include cluster- specifi c fi xed effects, few clusters, multiway clustering, and estimators other than OLS. © 2015 by the Board of Regents of the University of Wisconsin System.
One consequence of the expanding road network and its associated traffic is increased levels of traffic noise. While the hedonic literature has consistently found a negative relationship between real estate prices and noise levels, research in the United States has typically relied on crude measures of traffic noise. Here, we reduce the measurement error of traffic noise exposure through a detailed model of noise propagation over the landscape. We then estimate the hedonic relationship between noise and single family house prices using over 40,000 transactions throughout the St. Paul, Minnesota, urban area from 2005 to 2010. We implement spatially and temporally flexible local regression techniques and find significant nonstationarity in the hedonic function over time and space.
Using propensity score matching and regression techniques, together with an original database of approximately 12,000 inclusionary zoning (IZ) units built in Montgomery County, Maryland and Suffolk County, New York, this article comparatively analyzes the effect of IZ programs on racial and income integration and neighborhood change at the census tract level between 1980 and 2000. In particular, the article explores the question of whether IZ programs encourage stable neighborhood integration over time. This analysis fills a gap in the current empirical literature on the effect of IZ programs on neighborhood change and integration, an original policy goal that has not been evaluated previously due to data limitations. The findings indicate that the effect of IZ units on neighborhood racial and income transition is dependent on the siting of IZ units, the initial characteristics of the neighborhoods in which they are built, and the institutional framework of the IZ program. In the aggregate, IZ units positively affect the level of both racial and income integration in neighborhoods where units are built, although stark differences emerge between the two study areas. The findings do reveal the potential for IZ programs to exacerbate existing concentrations of poverty and patterns of residential racial segregation.
The current literature often values intangible goods like cultural heritage by applying stated preference methods. In recent years, however, the increasing availability of large databases on real estate transactions and listed prices has opened up new research possibilities and has reduced various existing barriers to applications of conventional (spatial) hedonic analysis to the real estate market. The present paper provides one of the first applications using a spatial autoregressive model to investigate the impact of cultural heritage—in particular, listed buildings and historic–cultural sites (or historic landmarks)—on the value of real estate in cities. In addition, this paper suggests a novel way of specifying the spatial weight matrix—only prices of sold houses influence current price—in identifying the spatial dependency effects between sold properties. The empirical application in the present study concerns the Dutch urban area of Zaanstad, a historic area for which over a long period of more than 20 years detailed information on individual dwellings, and their market prices are available in a GIS context. In this paper, the effect of cultural heritage is analysed in three complementary ways. First, we measure the effect of a listed building on its market price in the relevant area concerned. Secondly, we investigate the value that listed heritage has on nearby property. And finally, we estimate the effect of historic–cultural sites on real estate prices. We find that, to purchase a listed building, buyers are willing to pay an additional 26.9 %, while surrounding houses are worth an extra 0.28 % for each additional listed building within a 50-m radius. Houses sold within a conservation area appear to gain a premium of 26.4 % which confirms the existence of a ‘historic ensemble’ effect.
Many cities apply planning policies to protect a valuable building stock. These policies may have adverse side-effects. We aim to estimate the costs of within-city regulatory restrictions for house owners. To avoid endogeneity issues with respect to supply restrictions, we employ a regression-discontinuity approach using a World War II bombing boundary within the city of Rotterdam. Conditional on amenities and housing attributes, in the bombed area (where fewer restrictions apply) house prices are about 10% higher. This implies regulatory costs of about 0.72 million Euro per hectare for the area under consideration. The results suggest that house owners' benefits should be substantial to compensate for the costs of additional restrictions.
We propose a life-cycle model of the housing market with a property ladder and a credit constraint. We focus on equilibria
that replicate the facts that credit constraints delay some households' first home purchase and force other households to
buy a home smaller than they would like. The model helps us identify a powerful driver of the housing market: the ability
of young households to afford the down payment on a starter home, and in particular their income. The model also highlights
a channel whereby changes in income may yield housing price overreaction, with prices of trade-up homes displaying the most
volatility, and a positive correlation between housing prices and transactions. This channel relies on the capital gains or
losses on starter homes incurred by credit-constrained owners. We provide empirical support for our arguments with evidence
from both the U.K. and the U.S.
It is often thought that historic preservation and economic interests are competing values. This case study of a large Chicago neighborhood provides evidence that National Historic District designation was beneficial to properties in the district. Substantial external benefits were also found. The designation of two smaller areas within the study area as Chicago Historic Districts had a negative effect on property values, however, indicating that the impact depends on the restrictions imposed by preservation measures.
Purpose
– The purpose of this paper is to explore and quantify the impact of geographically defined school zones on house prices in New Zealand.
Design/methodology/approach
– This paper develops a series of hedonic pricing models to analyse 10,000 house sales transactions over a 21‐year period within a compact group of inner Auckland suburbs, which represents the epicentre of the school zoning debate in New Zealand. The study diverts from past research, which mainly focuses on school quality measures such as standardised test scores, and instead analyses the comprehensive price impacts of access to popular state schools. Its unique approach employs a geographic information system to divide the study area into effective school zones and then further subdivide into suburbs, thus offering a vital indicator of internal validity.
Findings
– The study's findings indicate that the influence of school zoning on house prices is not uniform and the variation in price effects is largely a function of the uncertainty of future zone boundary definitions. Although some “in‐zone” suburbs have enjoyed accelerated house price growth following the reintroduction of zoning in 2000, peripheral suburbs’ price premiums have diminished.
Originality/value
– In contrast to standard hedonic studies on school quality, this paper offers an innovative approach that integrates geography to solve what is essentially a spatial economic problem.
Purpose
This paper aims to evaluate the impact of submarkets on water view premiums of residential properties and investigate the correlation between submarket view premium and socio‐economic status.
Design/methodology/approach
Over 53,000 residential sales transactions from 2004 to 2006 are analysed using the hedonic method. The Auckland region is divided into 17 submarkets with similar water view scarcities. The region is analysed along with each individual submarket in order to determine if significant differences in view premiums exist.
Findings
The empirical results indicate that the regionwide model chronically over‐ or under‐estimates view premiums, for example, the regionwide model estimates that a wide water view adds 18 per cent to a home's value while the same view amenity adds only 5 per cent in modest West Harbour but 54 per cent in posh Mission Bay.
Practical implications
The study's findings can be directly applied to residential valuation practice and in particular mass appraisal systems.
Originality/value
This research fills a gap in the body of knowledge relating to water view externalities by investigating the differing price impacts across submarkets.
This article describes a qualitative study examining two interrelated facets of the school-to-work transition among urban high school students: their relationships with important adults within that transition and the ways they experience the subjective aspects of social class and class-related constructs in those relationships. Participants were 27 urban adolescents participating in a school-to-work program or otherwise employed after school. We analyzed data generated from participants’ elaborations on their scaled responses to adapted Relational Health Index items pertaining to supervisors and other important adults at work. Qualitative analysis identified four thematic categories of how social class is experienced in urban adolescents’ relationships at work: Navigation of Identity; Perceptions of Similarity, Difference, and Being Understood; Receipt of Mobility Encouragement; and Awareness of Stratification. Results suggest that the first two of these categories represent the ways that participants work to find balance between the dual realities of Mobility and Stratification.
We estimate the effect of land use regulation on the value of land by exploiting variation in regulation and land values across municipal borders. Since the value of land gives us the market's measure of the attract-iveness of a location, our estimates allow us to draw conclusions about the effect of land use regulation on welfare. Reductions to an aggregate measure of regulatory intensity are welfare improving. Looking at a more detailed description of regulation we find that complexity of the planning process and a planning process subject to political manipulation are most likely to lower welfare. Regulation that requires minimum lot sizes for residential development increases land values.
This study estimates the value of a view amenity in the owner occupied residential property market in Auckland. Several dimensions of a view are analysed: type of view, scope of view and distance to the coast. To improve efficiency, heteroscedasticity and autocorrelation consistent covariances are estimated. Results suggest that a view adds significantly to the value of a residential property, where a wide water view closer to the coast has the highest positive impact. It is found that a wide water view increases the mean sale price approximately by 44% at the coastline.
This article analyzes the impact of designated landmarks on condominium transaction prices in Berlin, Germany. We test for price differentials between listed and nonlisted properties and study their impact on surrounding property prices. The proximity to built heritage is captured by the distance to listed houses and heritage potentiality indicators. Impact is assessed by applying a hedonic model to microlevel data, and this process also addresses spatial dependency. While our findings suggest that designated landmarks do not sell at a premium or discount, landmarks are found to have positive external effects on surrounding property prices within a distance of approximately 600 m. Copyright (c) 2010 American Real Estate and Urban Economics Association.
This paper presents spatially explicit analyses of the greenspace contribution to residential property values in a hedonic
model. The paper utilizes data from the housing market near downtown Los Angeles. We first used a standard hedonic model to
estimate greenspace effects. Because the residuals were spatially autocorrelated, we implemented a spatial lag model as indicated
by specification tests. Our results show that neighborhood greenspace at the immediate vicinity of houses has a significant
impact on house prices even after controlling for spatial autocorrelation. The different estimation results from non-spatial
and spatial models provide useful bounds for the greenspace effect. Greening of inner city areas may provide a valuable policy
instrument for elevating depressed housing markets in those areas.
KeywordsHousing value-Urban greenspace-Hedonic pricing model-Spatial dependence
We first estimate the relationship between house prices and environmental disamenities using spatial statistics, confirming that nearby point-source pollutants depress house price. We then calculate implicit prices of environmental quality and related characteristics from the house price hedonics to estimate a demand curve for environmental quality, finding a price elasticity of demand of −0.12. We find evidence of significant spatial effects in both the hedonic and demand estimations. We find that environmental quality and school quality are purchased together (η=−0.80), environmental quality and house size are substitutes (η=0.91), and environmental quality and lot size are not related goods.
We maintain that the appropriate definition of submarkets depends on the use to which they will be put. For mass appraisal purposes, submarkets should be defined so that the accuracy of hedonic predictions will be optimized. Thus we test whether out-of-sample hedonic value predictions can be improved when a large urban housing market is divided into submarkets and we explore the effects of alternative definitions of submarkets on the accuracy of predictions. We compare a set of submarkets based on small geographical areas defined by real estate appraisers with a set of statistically generated submarkets consisting of dwellings that are similar but not necessarily contiguous. The empirical analysis uses a transactions database from Auckland, New Zealand. Price predictions are found to be most accurate when based on the housing market segmentation used by appraisers. We conclude that housing submarkets matter, and location plays the major role in explaining why they matter.
This paper presents an amenity-based theory of location by income. The theory shows that the relative location of different income groups depends on the spatial pattern of amenities in a city. When the center has a strong amenity advantage over the suburbs, the rich are likely to live at central locations. When the center's amenity advantage is weak or negative, the rich are likely to live in the suburbs. The virtue of the theory is that it ties location by income to a city's idiosyncratic characteristics. It thus predicts a multiplicity of location patterns across cities, consistent with real-world observation.
This paper presents a simple model of trade in the housing market. The crucial feature is that a minimum down payment is required
for the purchase of a new home. The model has direct implications for the volatility of house prices, as well as for the correlation
between prices and trading volume. The model can also be extended to address the correlation between prices and time-to-sale,
as well as certain aspects of the cyclical behavior of housing starts.
The significant price-trading volume correlation found in the residential property market presents a challenge to the rational expectation hypothesis. Existing theories account for this fact with either capital market imperfection (down-payment effect or loss-aversion consideration) or imperfect information (search theoretic models). This paper employs data from a commercial real estate market, which face a different degree of severity of capital market constraint than the residential market, and thus provide an indirect but effective test for alternative theories. Policy implications are also discussed. Copyright Springer Science + Business Media, Inc. 2005
We analyze appreciation rates across comparable designated and undesignated neighborhoods in Memphis, Tennessee. Using appreciation rates potentially nullifies the objection to using assessed values in such an analysis while also mitigating some of the bias inherent in the differences between otherwise similar designated and undesignated neighborhoods. Nonetheless, in accord with the previous studies, after controlling for numerous housing characteristics, we find that properties in neighborhoods designated historical by the Memphis Landmarks Commission had appreciation rates above those in other similar neighborhoods. We also find that new properties benefit as much, perhaps even more, than older properties from being in a historic district. Copyright 2005 by the American Real Estate and Urban Economics Association
We investigate the salary returns to the ability to play football with both feet. The majority of footballers are predominantly right footed. Using two data sets, a cross-section of footballers in the five main European leagues and a panel of players in the German Bundesliga, we find robust evidence of a substantial salary premium for two-footed ability, even after controlling for available player performance measures. We assess how this premium varies across the salary distribution and by player position.
Robust inference with multiway clustering
- Cameron
An assessment of the effects of conservation areas on value final report, the london school of economics and political science
- G Ahlfeldt
- N Holman
- N Wendland
Ahlfeldt, G., N. Holman, and N. Wendland (2012). An assessment of the effects of conservation
areas on value final report, the london school of economics and political science.
How do Aucklanders value their parks? A hedonic analysis of the impact of proximity to open space on residential property values
- J Allpress
- K Balderston
- P Nunns
Allpress, J., K. Balderston, and P. Nunns (2016). How do Aucklanders value their parks? A hedonic analysis of the impact of proximity to open space on residential property values. Technical
report, Auckland.
Auckland Housing Accord
- Auckland Council
Auckland Council (2013). Auckland Housing Accord.
National Policy Statement on Urban Development Capacity 2016: Housing and business development capacity assessment for Auckland
- Auckland Council
Auckland Council (2017). National Policy Statement on Urban Development Capacity 2016:
Housing and business development capacity assessment for Auckland. Technical report.
Auckland Unitary Plan
- Auckland Council
Auckland Council (2018). Auckland Unitary Plan.
How the Unitary Plan adds value to properties
- S Martin
- D Norman
Martin, S. and D. Norman (2018). How the Unitary Plan adds value to properties.
The value of land, floorspace, and amenities: A hedonic price analysis of property sales in Auckland
- P Nunns
- H Hitchins
- K Balderston
Nunns, P., H. Hitchins, and K. Balderston (2015). The value of land, floorspace, and amenities: A
hedonic price analysis of property sales in Auckland 2011-2014. Technical report.
Resource Management Act
Resource Management Act (1991). Resource Management Act.
Impact of Hauraki Gulf Amenity on the Land Price of Neighbourhood Properties
- M Rohani
Rohani, M. (2012). Impact of Hauraki Gulf Amenity on the Land Price of Neighbourhood Properties. Technical report.