DP11439 Distinctively Different: A New Approach to Valuing Architectural Amenities
|Author(s):||Gabriel Ahlfeldt, Nancy Holman|
|Publication Date:||August 2016|
|Keyword(s):||Architecture, boundary discontinuity, conservation areas, design, England, property prices|
|JEL(s):||C7, D23, R52|
|Programme Areas:||International Trade and Regional Economics|
|Link to this Page:||cepr.org/active/publications/discussion_papers/dp.php?dpno=11439|
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.