The Market Value of Listed Heritage: an Urban Economic Application of Spatial Hedonic Pricing

The current literature often values intangibles goods as cultural heritage by applying stated preference methods. In recent years, however, the increasing availability of large (spatial) databases on real estate transactions and listed prices has opened up new research possibilities and has reduced various existing barriers to applications of conventional (spatial) hedonic analysis to the real estate market. This now offers a promising new avenue for further research on the economic value of cultural heritage in the context of the urban housing market. The present paper provides one of the first spatial hedonic studies that investigates the economic effects of listed heritage –in particular, urban monuments and historic-cultural sites– on the value of real estate in cities. In addition, this paper aims to contribute to the spatialeconometric valuation literature by providing a novel quantitative analysis of an extensive micro data set on individual housing transactions over 22 years in the Dutch city of Zaanstad. In this paper the monument status effect is analysed in two interrelated ways. First, we measure the direct effect of monument status on the market price of the houses in the relevant area concerned. Secondly, we investigate the indirect value that monuments have on nearby property. Using spatial econometric techniques, we find that, controlling for other attributes, buyers are willing to pay an additional 26.9 per cent to purchase a monument, while surrounding houses are worth an extra 0.28 per cent for each additional monument within a 50-metre radius. Houses sold within a historic protected area appear to gain a premium of 26.4 per cent which confirms the existence of a historic ensemble effect.