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How cultural values are reflected on the housing market – direct effects and the cultural spillover

Author

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  • Magnus Andersson
  • Fredrik Kopsch
  • Peter Palm

Abstract

Purpose - The purpose of this paper is to analyse two questions. First, is there, and if so, how large is the price premium paid for a building exhibiting a cultural value? Second, are there any spillover effects of buildings with cultural values on sales prices of neighbouring houses? Design/methodology/approach - Using a unique database of all buildings in the region of Halland, Sweden, combined with transaction data, hedonic models can be estimated, with spatially lagged variables describing proximity to three classes of culturally classified building – A, B and C – corresponding to building of national interest, building of regional interest and building of local interest. In addition, the authors also estimate models with a spatial specification on the error term, in an attempt to control for omitted variables. Findings - The results indicate that cultural classification plays a role in determining the price of a property, with large effects (ranging between 36 and 60% price premiums) for the highest classification. In addition, the authors find evidence of a cultural externality, houses in the vicinity of building with high cultural value sell at a small, but statistically significant premium of 1%. Originality/value - The cultural externality may be overlooked when it comes to valuation of cultural values in society, and therefore, it is likely that warranted protection acts to preserve cultural values in buildings become less than the social optimum. This paper suggests a new measure to cultural values contrasting previous research that rely on cultural preservation. This approach should limit problems with measurement errors that may lead to biased results.

Suggested Citation

  • Magnus Andersson & Fredrik Kopsch & Peter Palm, 2019. "How cultural values are reflected on the housing market – direct effects and the cultural spillover," International Journal of Housing Markets and Analysis, Emerald Group Publishing Limited, vol. 12(3), pages 405-423, January.
  • Handle: RePEc:eme:ijhmap:ijhma-02-2018-0016
    DOI: 10.1108/IJHMA-02-2018-0016
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    Citations

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    Cited by:

    1. Rachel Gallagher & Thomas Jason Sigler & Yan Liu, 2024. "Character contradiction: The exclusionary nature of preservationist planning restrictions," Urban Studies, Urban Studies Journal Limited, vol. 61(6), pages 1013-1030, May.
    2. Elisabetta Lazzaro, 2021. "Linking the Creative Economy with Universities’ Entrepreneurship: A Spillover Approach," Sustainability, MDPI, vol. 13(3), pages 1-12, January.
    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.

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