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Distinctively different: a new approach to valuing architectural amenities

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  • Ahlfeldt, Gabriel M.
  • Holman, Nancy

Abstract

We propose a method to estimate the capitalised value of the architectural design quality of an area. Our economic design premium is identified by spatially differentiating property prices and design quality within neighbourhoods and comparing the differences across neighbourhoods. We apply our method to 48 conservation area neighbourhoods in England in which we analyse around 7900 property transactions and interview more than 500 residents. We find a capitalisation effect of about 6.6% (£16k) associated with a one standard deviation increase in our index of distinctive design. Our results suggest that this effect is at least partially driven by architectural externalities.

Suggested Citation

  • Ahlfeldt, Gabriel M. & Holman, Nancy, 2018. "Distinctively different: a new approach to valuing architectural amenities," LSE Research Online Documents on Economics 66241, London School of Economics and Political Science, LSE Library.
    • Handle: RePEc:ehl:lserod:66241
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    More about this item

    Keywords

    architecture; boundary discontinuity; conservation areas; design; England; property prices;
    All these keywords.

    JEL classification:

    • D23 - Microeconomics - - Production and Organizations - - - Organizational Behavior; Transaction Costs; Property Rights
    • R52 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Regional Government Analysis - - - Land Use and Other Regulations

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