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Aziz, A.; Anwar, M.M.; Abdo, H.G.; Almohamad, H.; Al Dughairi, A.A.; Al-Mutiry, M. Neighborhood Services and Property Values in Urban Area. Encyclopedia. Available online: https://encyclopedia.pub/entry/50638 (accessed on 18 May 2024).
Aziz A, Anwar MM, Abdo HG, Almohamad H, Al Dughairi AA, Al-Mutiry M. Neighborhood Services and Property Values in Urban Area. Encyclopedia. Available at: https://encyclopedia.pub/entry/50638. Accessed May 18, 2024.
Aziz, Asad, Muhammad Mushahid Anwar, Hazem Ghassan Abdo, Hussein Almohamad, Ahmed Abdullah Al Dughairi, Motrih Al-Mutiry. "Neighborhood Services and Property Values in Urban Area" Encyclopedia, https://encyclopedia.pub/entry/50638 (accessed May 18, 2024).
Aziz, A., Anwar, M.M., Abdo, H.G., Almohamad, H., Al Dughairi, A.A., & Al-Mutiry, M. (2023, October 21). Neighborhood Services and Property Values in Urban Area. In Encyclopedia. https://encyclopedia.pub/entry/50638
Aziz, Asad, et al. "Neighborhood Services and Property Values in Urban Area." Encyclopedia. Web. 21 October, 2023.
Neighborhood Services and Property Values in Urban Area
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This entry is adapted from the peer-reviewed paper 10.3390/land12040859

Neighborhood services, property attributes, and their associated amenities have positive impacts on land and property values. This impact is estimated by the hedonic pricing model, which is considered an effective method used in previous studies for such evaluations.

environment hedonic model land values proximity regression analysis

1. Introduction

In the urban world, the surrounding facilities have influential impacts on the property. A house or property at an accessible location is a basic unit for shelter in a settlement. Residential communities are the elementary living units in cities [1]. These units of living require different services and amenities, and one of them is neighborhood characteristics, which play an important role in defining the housing/property economy in a residential community, because they increase the competition between the demand for a property and the relative demand for a place [2]. The property values are significantly related to surrounding support facilities and community locations [1]. Economic fundamentals of property, land, and houses are recognized as determining factors, but the relationship between land and property prices is still disputed [3]. Effective urban planning requires known buyers about different amenities and neighborhood characteristics [4]. There is a dire need to understand these dynamics in the housing market in an urban world.
Several research studies demonstrate a positive and strong relationship between property values and neighborhood characteristics [5]. However, the impact of this relationship between neighborhood features and accessibility on property values has not been well examined in the literature, particularly in the developing world [6]. This study also attempts to assess how the surrounding facilities (environmental, neighborhood, locational, and economic attributes) impact the property and land values in an urban area for the housing and property market because, in this area, no previous research has been done on this topic; however, very few studies have been found in the country for other locations [7]. It has been found that such studies can be considered for a land-allocation plan which provides the baseline for accessibility measurement. This accessibility measure provides a platform for regular walking platforms in a built environment [8].

2. Proximity to Neighborhood Services and Property Values in Urban Area

A critical element for sustainable land use is a sustainable urban land-use policy [9]. The major change in land-use around the world is the expansion of the built-up environment and urbanization [10][11]. For achieving sustainable urbanization, it is critical to formulate policies and understand the spatiotemporal heterogeneity of the location and land use [12], where urbanization can be defined as the conversion of rural land into an urban area or its further development, which is growing rapidly [13]. Accessibility to surrounding facilities is a basic key measure for effective urban planning [14], and it also contributes to defining property values [15]. For policy making and urban planning, the impact of accessibility is valuable [16]. To evaluate the effectiveness of the policy-making process for an urban area, it is critical to evaluate this strategy in the context of sustainable urban development [9]. Association between neighborhood services and property values is an important aspect of the decision-making process in management strategies [17]. This association can be divided into other variables, which were discussed under the umbrella of structural, neighborhood/environmental, community, and locational attributes as considered in the hedonic model, for the formulation of the study.

2.1. Historical Background of the Hedonic Model

The word ‘hedonic’, meaning ‘pleasure’ has a Greek origin [18]; thus, hedonic pricing means ‘pay for pleasure’. This model was first introduced by Rosen in 1974, who used the hedonic coefficients to understand the marginal willingness to pay for goodness and neighborhood amenities [19]. It means more neighborhood services, more relative goodness, and more relative values. The hedonic pricing model is one of the best models to measure the relative values of property in economic terms [20]. This is the leading model for the valuation of environmental services [21]. Despite its long history, this method is considered an active research tool for property assessment around the world [22]. Basic assumptions of the hedonic model include more attributes of a property and more demand, price, and sales ratio. The method has proved that access to public and private services, public amenities, as well as structural attributes shape the real estate market price of a house/property [23]. These public amenities include public places such as schools, banks, hospitals, parks, and worship places, boosting property values [23]. A property that has more characteristics will have more utilities, and these utilities will increase the sales value of the property [24].
Description of the hedonic model: The basic assumption of this model is the evaluation of the impacts of neighborhood services on property values [25]. This model is considered a straightforward method and uncontroversial to apply; it lies in actual market values and data that can be collected directly from the field because the hedonic pricing model is used to estimate the total value of a property by the evaluation of local environmental and ecosystem services. The literature found that the traveling cost method is also used for the estimation of the influences of urban parks on the values of the property, but this method is valid if only traveling cost is investigated [26]. The hedonic pricing model measures the potential by dividing the total cost of property into separate costs for each characteristic or variable [27]. In this study, each variable is divided into sub-components such as the number of bedrooms, and bathrooms, the total area of the house/property, and proximity (walkability) to neighborhood services such as parks, markets, etc. The value of all these services defines the total cost of the property, and this method evaluates the willingness to pay for the attributes [28]. It has been observed that consumers make decisions not by a single character but by the number of characteristics that are counted to make decisions [29].

2.2. Neighborhood Characteristics

The associated characteristics such as social, environmental, or neighborhood will increase as well as decrease property values for those who live nearby and use them directly, for exercise, recreation, walking on green belts, similarly for ownership, societal events, traditions, schooling, and other usages [30]. While decrease in a sense, when these associated characteristics have negative effects, such as air pollution and traffic noise in rapidly growing cities on housing/property marketing, that is referred to as hedonic homogeneity [31]. These negative effects are auto-correlated in the sense that a house/property adjacent to a road has high accessibility, with the negative effect of traffic noise [31]. The local people directly attached to attributes will be affected. However, the disparity in prices is an unpredictable phenomenon temporally and spatially but will be considered when deciding on investment and purchasing a new property in the future.
Urban growth changes rapidly in every sphere of life in an area [4]. Considerably, in the least developing countries, urban planning has been done without the participation of the local community [32]. For policy making, urban planners need to check the influence of quality improvements on land values [33]; therefore, assessment and measurement are needed for financial and economic development.

References

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  2. Nilsson, P. Natural amenities in urban space—A geographically weighted regression approach. Landsc. Urban Plan. 2014, 121, 45–54.
  3. Wen, H.; Goodman, A.C. Relationship between urban land price and housing price: Evidence from 21 provincial capitals in China. Habitat Int. 2013, 40, 9–17.
  4. El Garouani, A.; Mulla, D.J.; El Garouani, S.; Knight, J. Analysis of urban growth and sprawl from remote sensing data: Case of Fez, Morocco. Int. J. Sustain. Built Environ. 2017, 6, 160–169.
  5. Meng, Q.; Zheng, Y.; Liu, Q.; Li, B.; Wei, H. Analysis of Spatiotemporal Variation and Influencing Factors of Land-Use Carbon Emissions in Nine Provinces of the Yellow River Basin Based on the LMDI Model. Land 2023, 12, 437.
  6. Tian, G.; Wei, Y.D.; Li, H. Effects of accessibility and environmental health risk on housing prices: A case of Salt Lake County, Utah. Appl. Geogr. 2017, 89, 12–21.
  7. Shabana; Ali, G.; Bashir, M.K.; Ali, H. Housing valuation of different towns using the hedonic model: A case of Faisalabad city, Pakistan. Habitat Int. 2015, 50, 240–249.
  8. Ghani, F.; Rachele, J.; Loh, V.H.Y.; Washington, S.; Turrell, G. Do differences in built environments explain age differences in transport walking across neighbourhoods? J. Transp. Health 2018, 9, 83–95.
  9. Lu, X.-H.; Ke, S.-G. Evaluating the effectiveness of sustainable urban land use in China from the perspective of sustainable urbanization. Habitat Int. 2018, 77, 90–98.
  10. Chen, Y.; Chen, Z.; Xu, G.; Tian, Z. Built-up land efficiency in urban China: Insights from the General Land Use Plan (2006–2020). Habitat Int. 2016, 51, 31–38.
  11. Fraissinet, M.; Ancillotto, L.; Migliozzi, A.; Capasso, S.; Bosso, L.; Chamberlain, D.E.; Russo, D. Responses of avian assemblages to spatiotemporal landscape dynamics in urban ecosystems. Landsc. Ecol. 2023, 38, 293–305.
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  13. Tong, D.; Yuan, Y.; Wang, X.; Wu, L. Spatially varying relationships between land ownership and land development at the urban fringe: A case study of Shenzhen, China. Cities 2019, 105, 102238.
  14. Sun, J.; Zhou, L.; Zong, H. Landscape Pattern Vulnerability of the Eastern Hengduan Mountains, China and Response to Elevation and Artificial Disturbance. Land 2022, 11, 1110.
  15. Verma, A.; Verma, M.; Rahul, T.; Khurana, S.; Rai, A. Measuring accessibility of various facilities by walking in world’s largest mass religious gathering—Kumbh Mela. Sustain. Cities Soc. 2019, 45, 79–86.
  16. Contesse, M.; van Vliet, B.J.; Lenhart, J. Is urban agriculture urban green space? A comparison of policy arrangements for urban green space and urban agriculture in Santiago de Chile. Land Use Policy 2018, 71, 566–577.
  17. Mora-Navarro, G.; Femenia-Ribera, C.; Torres, J.M.V.; Martinez-Llario, J. Geographical Data and Metadata on Land Administration in Spain. Land 2022, 11, 1107.
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  27. Mayora, K.; Lyons, S.; Duffy, D.; Tol Richard, S.J. A Hedonic Analysis of the Value of Parks and Green Spaces in the Dublin Area; Economic and Social Research Institute: Dublin, Ireland, 2009.
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Subjects: Geography, Physical
Contributors MDPI registered users' name will be linked to their SciProfiles pages. To register with us, please refer to https://encyclopedia.pub/register :
Asad Aziz
,
Muhammad Mushahid Anwar
,
Hazem Ghassan Abdo
,
Hussein Almohamad
,
Ahmed Abdullah Al Dughairi
,
Motrih Al-Mutiry
View Times: 218
Revisions: 2 times (View History)
Update Date: 23 Oct 2023
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