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Distinctively different: A new approach to valuing architectural amenities

Listed author(s):
  • Gabriel Ahlfeldt

    ()

  • Nancy Holman

We propose a method to estimate the capitalized value of the architectural design quality of a neighbourhood. 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 47 conservation area neighbourhoods in England in which we analyse around 7900 property transactions and interview more than 500 residents. We find a capitalization effect of about 25.4% (£38.7k) associated with a one-step increase on a five-step scale ranging from not at all-distinctive to very distinctive. Our results suggest that this effect is at least partially driven by an architectural externality.

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File URL: http://www-sre.wu.ac.at/ersa/ersaconfs/ersa15/e150825aFinal00061.pdf
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Paper provided by European Regional Science Association in its series ERSA conference papers with number ersa15p61.

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Date of creation: Oct 2015
Handle: RePEc:wiw:wiwrsa:ersa15p61
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