Heritage Designation and House Prices

Built cultural heritage is generally believed to be an important urban amenity that influences the attractiveness of cities as place of residence and business location. However, while the provision and maintenance of cultural heritage is costly and relatively easily estimated, the benefits arising from cultural heritage are much harder to quantify. Consequently, historic buildings have been demolished because the costs of adopting them for new use were estimated to outweigh the possible price premium related to the historic nature of the building. Quantification of the benefits of cultural heritage might provide an additional incentive and justification for public and private parties to preserve and maintain the stock of built cultural heritage. In this paper, the value effect of cultural heritage is analysed in two ways: the price effect of listed status on the market value of dwellings is investigated; and possible externalities – spillover effects – of listed buildings on nearby property values are explored. For this purpose several specifications of hedonic price equations are estimated to determine whether a listed building status yields a price premium and if proximity to listed buildings is capitalised in property values.