Distinctively Different: A New Approach to Valuing Architectural Amenities
- We gratefully acknowledge the Suntory and Toyota International Centres for Economics and Related Disciplines (STICERD) for funding and Nationwide and English Heritage for the provision of data. We thank seminar participants in London (SERC), Dublin (Civic Trust) and Zurich (CUREM) and in particular Paul Cheshire, Christian Hilber, Henry Overman, Olmo Silva and Sevrin Waights for comments and suggestions. For excellent research assistance and field work we thank: Thilo Albers, Agathe Bounfour, Nicolas Bosetti, Grant Collier, Charlotte Degoulet, Angelica Deng, Irène Fossé, Clara Ganemtore, Faye Goodson, Alexandru Gotca, David Gundry, Simon Hicks; Lucie Imbeau, Doan Lebel; Leona Lynen, Rajat Malik, Saba Meidany, Rachita Misra; Alessandra Mossa; Julia Panayotou, Erica Pani, Mailys Pineau, Sin Sin Qin, Maike Rackwitz, Sebastian Raho, Felipe Ramirez-Buitrago, Emma Sagor, Isabel Shirin Enyonam Wetzel, Alkis Theodhori, Stefan Tornack, Anastasia Tymen, Syd Wayman.
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.