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The Implications of Housing Density and Mix on House Prices

The Implications of Housing Density and Mix on House Prices. Glen Bramley, Neil Dunse, Sotirios Thanos and David Watkins School of the Built Environment Heriot Watt University Edinburgh Email: n.a.dunse@hw.ac.uk. Background.

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The Implications of Housing Density and Mix on House Prices

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  1. The Implications of Housing Density and Mix on House Prices Glen Bramley, Neil Dunse, Sotirios Thanos and David Watkins School of the Built Environment Heriot Watt University Edinburgh Email: n.a.dunse@hw.ac.uk

  2. Background • Research funded by the National Housing Planning Advice Unit (NHPAU) • The aims of this research are • To analyse the implication of residential mix (type and density) upon house prices • To simulate viability of alternative residential development schemes. • Densities of new residential development in England have risen sharply in the 2000s. • Tendency to focus upon the construction of either high density apartments or large detached houses (Bramley & Brown 2008).

  3. UK Planning Policy • Planning policy through the 1990s: sustainability and the compact city • JRF Inquiry into Planning for Housing (1994) re-use of urban land and increased urban densities • Future Homes: Opportunity, Choice, Responsibility (1995 ) set out a target of 50% of new residential development on brownfield land • Planning for the Communities of the Future (1998) raised to 60% • PPG3 (2000), • introduced a ‘new’ approach to land allocation/availability, based on urban capacity studies • overall density target of 30-50 dwellings per hectare • PPS3 (2006) • promotes housing development which provides: • high quality housing; a mix of both market and affordable housing (tenure, price and type); • housing in suitable locations; • effective and efficient use of land, while maintaining the 60% target for brownfield land • 30 dwellings per hectare national indicative minimum density.

  4. Housing Density (1996-2006)

  5. Net Density of New Housing by Region 1996-2006

  6. Density and Share of Flats in New Private Development by Wards Types

  7. Literature Review • Hedonic Pricing Literature • residents are willing to pay less for houses in neighbourhoods that are dense, contain more commercial uses and multifamily homes (flats). • Song and Knaap (2003 and 2004), Matthews and Turnbull (2007) • Household survey • dissatisfaction with area and home was more common in terraced houses and flat and higher densities, • Parkes et al’s (2001), Mohan & Twigg (2007), • favour suburban locations (above inner urban, small town, dockland, city-centre locations); houses (of all types) over apartments, and detached/attached houses over terraces • planning guidance on density is couched in terms of units and not rooms • nothing to bring a range of unit sizes to the market • tends to reinforce developer preferences for building flats • Silverman, Lupton & Fenton (2005) • Bramley and Brown (2006)

  8. Hedonic House Price Model where: P sales price of house; S structural attributes and market conditions; E socio-economic characteristics; N ethnic mix D residential density of census area; M house type mix of census area;

  9. Density and Mix Variables

  10. Case Study • Regulated Mortgage Survey (RMS) house price dataset • 2005 and 2007 (90666 transactions) • Six case study areas: • London North East (Redbridge, Waltham Forest and Hackney) • London South West (Hammersmith and Fulham, Hounslow and Richmond upon Thames) • Manchester (Manchester and Salford) • Leeds • Nottingham (Nottingham and Rushcliffe) • Southampton (Southampton, Eastleigh, Test Valley)

  11. Case Study Areas

  12. House Type: Results

  13. Density and Mix: Results

  14. Density and Mix: Value

  15. Conclusions • UK planning policy has encouraged high density and polarised house type mix • Evidence to support existing literature • High density often associated with a negative premium • Preference for detached over other house types • Preference for houses over flats(apartments) • First stage: density/mix and residual land values and affordability • house price levels and patterns are also relevant to another social policy concern, namely the concern about affordability.

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