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Abstract:

Journal Article
Distinctively Different: A New Approach to Valuing Architectural Amenities
Gabriel M. Ahlfeldt and Nancy Holman
February 2018

Economic Journal 128(608), 2018
DOI: 10.1111/ecoj.12429

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 7,900 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.

DOI: 10.1111/ecoj.12429