IDEAS home Printed from https://ideas.repec.org/a/eee/lauspo/v99y2020ics0264837719317016.html
   My bibliography  Save this article

The price premium of heritage in the housing market: evidence from Auckland, New Zealand

Author

Listed:
  • Bade, David
  • Castillo, Jose Gabriel
  • Fernandez, Mario Andres
  • Aguilar-Bohorquez, Joseph

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.

Suggested Citation

  • Bade, David & Castillo, Jose Gabriel & Fernandez, Mario Andres & Aguilar-Bohorquez, Joseph, 2020. "The price premium of heritage in the housing market: evidence from Auckland, New Zealand," Land Use Policy, Elsevier, vol. 99(C).
    • Handle: RePEc:eee:lauspo:v:99:y:2020:i:c:s0264837719317016
    DOI: 10.1016/j.landusepol.2020.105042
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0264837719317016
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.landusepol.2020.105042?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Mario A. Fernandez & Gonzalo E. Sánchez & Santiago Bucaram, 2021. "Price effects of the special housing areas in Auckland," New Zealand Economic Papers, Taylor & Francis Journals, vol. 55(1), pages 141-154, January.
    2. Jim Clayton & Norman Miller & Liang Peng, 2010. "Price-volume Correlation in the Housing Market: Causality and Co-movements," The Journal of Real Estate Finance and Economics, Springer, vol. 40(1), pages 14-40, January.
    3. Delores Conway & Christina Li & Jennifer Wolch & Christopher Kahle & Michael Jerrett, 2010. "A Spatial Autocorrelation Approach for Examining the Effects of Urban Greenspace on Residential Property Values," The Journal of Real Estate Finance and Economics, Springer, vol. 41(2), pages 150-169, August.
    4. Brueckner, Jan K. & Thisse, Jacques-Francois & Zenou, Yves, 1999. "Why is central Paris rich and downtown Detroit poor?: An amenity-based theory," European Economic Review, Elsevier, vol. 43(1), pages 91-107, January.
    5. Koster, Hans R.A. & van Ommeren, Jos & Rietveld, Piet, 2012. "Bombs, boundaries and buildings," Regional Science and Urban Economics, Elsevier, vol. 42(4), pages 631-641.
    6. Cameron, A. Colin & Gelbach, Jonah B. & Miller, Douglas L., 2011. "Robust Inference With Multiway Clustering," Journal of Business & Economic Statistics, American Statistical Association, vol. 29(2), pages 238-249.
    7. Peter V. Schaeffer & Cecily Ahern Millerick, 1991. "The Impact of Historic District Designation on Property Values: An Empirical Study," Economic Development Quarterly, , vol. 5(4), pages 301-312, November.
    8. A. Colin Cameron & Douglas L. Miller, 2015. "A Practitioner’s Guide to Cluster-Robust Inference," Journal of Human Resources, University of Wisconsin Press, vol. 50(2), pages 317-372.
    9. Mirko Moro & Karen Mayor & Seán Lyons & Richard S J Tol, 2013. "Does the Housing Market Reflect Cultural Heritage? A Case Study of Greater Dublin," Environment and Planning A, , vol. 45(12), pages 2884-2903, December.
    10. Luc Anselin & Nancy Lozano-Gracia, 2009. "Errors in variables and spatial effects in hedonic house price models of ambient air quality," Studies in Empirical Economics, in: Giuseppe Arbia & Badi H. Baltagi (ed.), Spatial Econometrics, pages 5-34, Springer.
    11. Gabriel M. Ahlfeldt & Kristoffer Moeller & Sevrin Waights & Nicolai Wendland, 2017. "Game of Zones: The Political Economy of Conservation Areas," Economic Journal, Royal Economic Society, vol. 127(605), pages 421-445, October.
    12. Bourassa, Steven C. & Hoesli, Martin & Peng, Vincent S., 2003. "Do housing submarkets really matter?," Journal of Housing Economics, Elsevier, vol. 12(1), pages 12-28, March.
    13. François Ortalo-Magné & Sven Rady, 2006. "Housing Market Dynamics: On the Contribution of Income Shocks and Credit Constraints ," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 73(2), pages 459-485.
    14. David M. Brasington & Diane Hite, 2005. "Demand for Environmental Quality: A Spatial Hedonic Approach," Departmental Working Papers 2005-08, Department of Economics, Louisiana State University.
    15. Fernandez, Mario Andres & Bucaram, Santiago, 2019. "The changing face of environmental amenities: Heterogeneity across housing submarkets and time," Land Use Policy, Elsevier, vol. 83(C), pages 449-460.
    16. Aaron Swoboda & Tsegaye Nega & Maxwell Timm, 2015. "Hedonic Analysis Over Time And Space: The Case Of House Prices And Traffic Noise," Journal of Regional Science, Wiley Blackwell, vol. 55(4), pages 644-670, September.
    17. Jeremy C. Stein, 1995. "Prices and Trading Volume in the Housing Market: A Model with Down-Payment Effects," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 110(2), pages 379-406.
    18. Rosen, Sherwin, 1974. "Hedonic Prices and Implicit Markets: Product Differentiation in Pure Competition," Journal of Political Economy, University of Chicago Press, vol. 82(1), pages 34-55, Jan.-Feb..
    19. Stephen Gibbons & Susana Mourato & Guilherme Resende, 2014. "The Amenity Value of English Nature: A Hedonic Price Approach," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 57(2), pages 175-196, February.
    20. Matthew A. Turner & Andrew Haughwout & Wilbert van der Klaauw, 2014. "Land Use Regulation and Welfare," Econometrica, Econometric Society, vol. 82(4), pages 1341-1403, July.
    21. Halvorsen, Robert & Palmquist, Raymond, 1980. "The Interpretation of Dummy Variables in Semilogarithmic Equations," American Economic Review, American Economic Association, vol. 70(3), pages 474-475, June.
    22. Been, Vicki & Ellen, Ingrid Gould & Gedal, Michael & Glaeser, Edward & McCabe, Brian J., 2016. "Preserving history or restricting development? The heterogeneous effects of historic districts on local housing markets in New York City," Journal of Urban Economics, Elsevier, vol. 92(C), pages 16-30.
    23. Olga Filippova, 2009. "The influence of submarkets on water view house price premiums in New Zealand," International Journal of Housing Markets and Analysis, Emerald Group Publishing Limited, vol. 2(1), pages 91-105, March.
    24. Gabriel M. Ahlfeldt & Kristoffer Moeller & Sevrin Waights & Nicolai Wendland, 2013. "Game of Zones: The Economics of Conservation Areas," SERC Discussion Papers 0143, Centre for Economic Performance, LSE.
    25. Hans R.A. Koster & Jan Rouwendal, 2017. "Historic Amenities and Housing Externalities: Evidence from the Netherlands," Economic Journal, Royal Economic Society, vol. 127(605), pages 396-420, October.
    26. Brasington, David M. & Hite, Diane, 2005. "Demand for environmental quality: a spatial hedonic analysis," Regional Science and Urban Economics, Elsevier, vol. 35(1), pages 57-82, January.
    27. Oshadhi Samarasinghe & Basil Sharp, 2008. "The value of a view: A spatial hedonic analysis," New Zealand Economic Papers, Taylor & Francis Journals, vol. 42(1), pages 59-78.
    28. Franco, Sofia F. & Macdonald, Jacob L., 2018. "The effects of cultural heritage on residential property values: Evidence from Lisbon, Portugal," Regional Science and Urban Economics, Elsevier, vol. 70(C), pages 35-56.
    29. Charles Leung & Dandan Feng, 2005. "What Drives the Property Price-Trading Volume Correlation? Evidence from a Commercial Real Estate Market," The Journal of Real Estate Finance and Economics, Springer, vol. 31(2), pages 241-255, September.
    30. Michael Rehm & Olga Filippova, 2008. "The impact of geographically defined school zones on house prices in New Zealand," International Journal of Housing Markets and Analysis, Emerald Group Publishing Limited, vol. 1(4), pages 313-336, November.
    31. Zabel, Jeffrey, 2015. "The hedonic model and the housing cycle," Regional Science and Urban Economics, Elsevier, vol. 54(C), pages 74-86.
    32. Hans R.A. Koster & Jan Rouwendal, 2017. "Historic Amenities and Housing Externalities: Evidence from the Netherlands," Economic Journal, Royal Economic Society, vol. 127(605), pages 396-420, October.
    33. Faroek Lazrak & Peter Nijkamp & Piet Rietveld & Jan Rouwendal, 2014. "The market value of cultural heritage in urban areas: an application of spatial hedonic pricing," Journal of Geographical Systems, Springer, vol. 16(1), pages 89-114, January.
    34. Wright, William C.C. & Eppink, Florian V., 2016. "Drivers of heritage value: A meta-analysis of monetary valuation studies of cultural heritage," Ecological Economics, Elsevier, vol. 130(C), pages 277-284.
    35. Gabriel M. Ahlfeldt & Wolfgang Maennig, 2010. "Substitutability and Complementarity of Urban Amenities: External Effects of Built Heritage in Berlin," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 38(2), pages 285-323, June.
    36. Hicks, Robert L. & Queen, Bonnie M., 2016. "Valuing Historical and Open Space Amenities with Hedonic Property Valuation Models," Agricultural and Resource Economics Review, Cambridge University Press, vol. 45(1), pages 44-67, April.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Chong Wu & Mengling Yang & Hang Zhang & Yafang Yu, 2023. "Spatial Structure and Evolution of Territorial Function of Rural Areas at Cultural Heritage Sites from the Perspective of Social Space," Land, MDPI, vol. 12(5), pages 1-22, May.
    2. Chin Tiong Cheng & Gabriel Hoh Teck Ling & Hon-Choong Chin & Pau Chung Leng, 2023. "Effects of Multifaceted Street Art on Price Premium of Pre War Commercial Buildings: The Case of Georgetown UNESCO World Heritage Site," Land, MDPI, vol. 12(3), pages 1-24, March.
    3. Lydia Cheung & Mario Andres Fernandez, 2021. "Changes in Amenity Values after COVID‐19 Lockdowns in Auckland, New Zealand," Economic Papers, The Economic Society of Australia, vol. 40(4), pages 331-350, December.
    4. Mario A. Fernandez & Shane L. Martin, 2020. "What’s so special about character?," Urban Studies, Urban Studies Journal Limited, vol. 57(16), pages 3236-3251, December.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Mario A. Fernandez & Shane L. Martin, 2020. "What’s so special about character?," Urban Studies, Urban Studies Journal Limited, vol. 57(16), pages 3236-3251, December.
    2. Zhou, Yang, 2021. "The political economy of historic districts: The private, the public, and the collective," Regional Science and Urban Economics, Elsevier, vol. 86(C).
    3. Fernandez, Mario Andres & Bucaram, Santiago, 2019. "The changing face of environmental amenities: Heterogeneity across housing submarkets and time," Land Use Policy, Elsevier, vol. 83(C), pages 449-460.
    4. Cuberes, David & Roberts, Jennifer & Sechel, Cristina, 2019. "Household location in English cities," Regional Science and Urban Economics, Elsevier, vol. 75(C), pages 120-135.
    5. Franco, Sofia F. & Macdonald, Jacob L., 2018. "The effects of cultural heritage on residential property values: Evidence from Lisbon, Portugal," Regional Science and Urban Economics, Elsevier, vol. 70(C), pages 35-56.
    6. Gabriel M. Ahlfeldt & Nancy Holman, 2018. "Distinctively Different: A New Approach to Valuing Architectural Amenities," Economic Journal, Royal Economic Society, vol. 128(608), pages 1-33, February.
    7. Hilber, Christian A.L. & Palmer, Charles & Pinchbeck, Edward W., 2019. "The energy costs of historic preservation," Journal of Urban Economics, Elsevier, vol. 114(C).
    8. Portillo, Javier E. & Wagner, Gary A., 2021. "Do cultural districts spur urban revitalization: Evidence from Louisiana," Journal of Economic Behavior & Organization, Elsevier, vol. 188(C), pages 651-673.
    9. van Duijn, Mark & Rouwendal, Jan, 2021. "Sorting based on urban heritage and income: Evidence from the Amsterdam metropolitan area," Regional Science and Urban Economics, Elsevier, vol. 90(C).
    10. Sevrin Waights, 2019. "The preservation of historic districts—is it worth it?," Journal of Economic Geography, Oxford University Press, vol. 19(2), pages 433-464.
    11. Julia Koschinsky & Nancy Lozano-Gracia & Gianfranco Piras, 2012. "The welfare benefit of a home’s location: an empirical comparison of spatial and non-spatial model estimates," Journal of Geographical Systems, Springer, vol. 14(3), pages 319-356, July.
    12. Gabriel Ahlfeldt & Kristoffer Möller & Sevrin Waights & Nicolai Wendland, 2012. "On prisoner's dilemmas and gilded cages: The economics of heritage preservation," ERSA conference papers ersa12p783, European Regional Science Association.
    13. Richter, Felix & Ahlfeldt, Gabriel & Maennig, Wolfgang, 2013. "Urban renewal after the Berlin Wall," VfS Annual Conference 2013 (Duesseldorf): Competition Policy and Regulation in a Global Economic Order 79789, Verein für Socialpolitik / German Economic Association.
    14. Tris Kee & Kwong Wing Chau, 2020. "Adaptive reuse of heritage architecture and its external effects on sustainable built environment—Hedonic pricing model and case studies in Hong Kong," Sustainable Development, John Wiley & Sons, Ltd., vol. 28(6), pages 1597-1608, November.
    15. Koster, Hans R.A. & van Ommeren, Jos & Volkhausen, Nicolas, 2021. "Short-term rentals and the housing market: Quasi-experimental evidence from Airbnb in Los Angeles," Journal of Urban Economics, Elsevier, vol. 124(C).
    16. Badarinza, Cristian & Ramadorai, Tarun, 2018. "Home away from home? Foreign demand and London house prices," Journal of Financial Economics, Elsevier, vol. 130(3), pages 532-555.
    17. Faroek Lazrak & Peter Nijkamp & Piet Rietveld & Jan Rouwendal, 2014. "The market value of cultural heritage in urban areas: an application of spatial hedonic pricing," Journal of Geographical Systems, Springer, vol. 16(1), pages 89-114, January.
    18. Myung-Jin Jun, 2018. "Quantifying Welfare Impacts of Air Pollution in Seoul: A Two-Stage Hedonic Price Approach," Journal of Environmental Assessment Policy and Management (JEAPM), World Scientific Publishing Co. Pte. Ltd., vol. 20(02), pages 1-25, June.
    19. Hyun, Dongwoo & Milcheva, Stanimira, 2018. "Spatial dependence in apartment transaction prices during boom and bust," Regional Science and Urban Economics, Elsevier, vol. 68(C), pages 36-45.
    20. Lydia Cheung & Mario Andres Fernandez, 2021. "Changes in Amenity Values after COVID‐19 Lockdowns in Auckland, New Zealand," Economic Papers, The Economic Society of Australia, vol. 40(4), pages 331-350, December.

    More about this item

    Keywords

    Heritage; Heritage premium; Hedonic price models; Housing market; Conservation areas;
    All these keywords.

    JEL classification:

    • C21 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models
    • R1 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics
    • R2 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis
    • R5 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Regional Government Analysis
    • Z10 - Other Special Topics - - Cultural Economics - - - General

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:lauspo:v:99:y:2020:i:c:s0264837719317016. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Joice Jiang (email available below). General contact details of provider: https://www.journals.elsevier.com/land-use-policy .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.