What are the factors that give a place value?

Little Green Street, Kentish Town, London: probably quite valuable. Image: Getty.

The value of place is simultaneously the most discussed and the least understood of all things. House prices used to be the leitmotiv of a million clichéd dinner parties – no more, I think – but what we mean by the value of an actual neighbourhood and what drives that value is not only little discussed. It has, until recently, barely even been studied.

Create Street’s new report, Beyond Location, tries to answer this question. We have taken advantage of new techniques for analysing values as well as the big data revolution. We have conducted a uniquely wide, data-rich analysis of every 2016 property sale in six English cities (London, Birmingham, Manchester, Leeds, Liverpool and Newcastle).

This has used open datasets to compute basic urban characteristics, such as street network connectivity, population density, amount of greenery, availability of different transport modes. The point of the analysis was not to investigate them separately, but together – and to permit city-wide conclusions and inter-city comparisons.

The findings – part predictable, part surprising – tell us much about the state of our cities. One thing they do show is that urban form really does matter in understanding value. Our models for urban form can predict up to 74 per cent of the official UK poverty index – the Index of Multiple Deprivation – and up to 54 per cent of sales values.

How do specific characteristics affect the value of a London property?

Our key findings include that more greenery is not always a good thing. The immediate presence of attractive greenery or high-quality parks can add huge value in many situations. However, at the city-wide level, the presence of more greenery can be associated with lower as well as higher value. What it is and how it is managed really matters. For example, in London, a home closer than average to a high-quality park costs, on average, 11 per cent (or £51,000) more than one that is not, holding everything else equal. However, in Liverpool, a home located closer than average to a high-quality park is worth, on average, 7 per cent (or £7,760) less. 

Land use and form also matters. We found significant relationships across the six cities between urban form and deprivation and value. Areas of high population and high areas of unbuilt land – for example, high-rise estates with lots of wide-open space – are less valuable and often associated with more deprived communities. This might be partly due to the history of post-war building but, after thirty years of right to buy, most people who can afford to choose continue to avoid this type of urban pattern

Population density and deprivation in London. Click to expand.

The heritage premium is more important than the new build premium. In every city studied, proximity to a listed building was associated with more additional value than the premium associated with a newly built home. A home closer than average to a listed building in London is worth 10.3 per cent (or £49,770) more than one that isn’t, holding everything else equal. The equivalent new build premium is only £8,795.

The findings also highlight a clear difference between London and the other British cities. Accessible income is driving an urban renaissance in London out of all proportion to that visible elsewhere in the UK. Walkable street-based networks or older properties have a value premium over other neighbourhoods which far exceeds that yet visible in other cities. Proximity to a listed building is associated with nearly seven times as much value premium in London as in the other cities studied.

Finally, diversity is valuable. Areas with more diversity of house types suffer from less deprivation. Areas with a more diverse offering of transport and amenities are normally worth more, other things being equal. Above average amenity diversity is associated with additional value in all cities studied.

Property value and connectivity in Newcastle. Click to expand.

Value is a fraught term. Extra value is not always a good thing – certainly not for everyone. In globally successful cities, spiralling house prices are forcing out existing communities. There are ‘sorting effects’, where the better off out-compete the less well-off for the best places.


The ultimate aim of this study therefore is to help developers to build and planners to permit more good places by understanding human preferences more richly.

One thing is for certain though. When it comes to understanding, and predicting, economic and social value, urban form and design really matters.

Alessandro Venerandi is a researcher and urban designer at Create Streets. He has recently completed his doctorate in urban sustainability and resilience at UCL. Beyond Location is available here.

 
 
 
 

A growing number of voters will never own their own home. Why is the government ignoring them?

A lettings agent window. Image: Getty.

The dream of a property-owning democracy continues to define British housing policy. From Right-to-Buy to Help-to-Buy, policies are framed around the model of the ‘first-time buyer’ and her quest for property acquisition. The goal of Philip Hammond’s upcoming budget – hailed as a major “intervention” in the “broken” housing market – is to ensure that “the next generation will have the same opportunities as their parents to own a home.”

These policies are designed for an alternative reality. Over the last two decades, the dream of the property-owning democracy has come completely undone. While government schemes used to churn out more home owners, today it moves in reverse.

Generation Rent’s new report, “Life in the Rental Sector”, suggests that more Britons are living longer in the private rental sector. We predict the number of ‘silver renters’ – pensioners in the private rental sector – will rise to one million by 2035, a three-fold increase from today.

These renters have drifted way beyond the dream of home ownership: only 11 per cent of renters over 65 expect to own a home. Our survey results show that these renters are twice as likely than renters in their 20s to prefer affordable rental tenure over homeownership.

Lowering stamp duty or providing mortgage relief completely miss the point. These are renters – life-long renters – and they want rental relief: guaranteed tenancies, protection from eviction, rent inflation regulation.

The assumption of a British ‘obsession’ with homeownership – which has informed so much housing policy over the years – stands on flimsy ground. Most of the time, it is based on a single survey question: Would you like to rent a home or own a home? It’s a preposterous question, of course, because, well, who wouldn’t like to own a home at a time when the chief economist of the Bank of England has made the case for homes as a ‘better bet’ for retirement than pensions?


Here we arrive at the real toxicity of the property-owning dream. It promotes a vicious cycle: support for first-time buyers increases demand for home ownership, fresh demand raises house prices, house price inflation turns housing into a profitable investment, and investment incentives stoke preferences for home ownership all over again.

The cycle is now, finally, breaking. Not without pain, Britons are waking up to the madness of a housing policy organised around home ownership. And they are demanding reforms that respect renting as a life-time tenure.

At the 1946 Conservative Party conference, Anthony Eden extolled the virtues of a property-owning democracy as a defence against socialist appeal. “The ownership of property is not a crime or a sin,” he said, “but a reward, a right and responsibility that must be shared as equitable as possible among all our citizens.”

The Tories are now sleeping in the bed they have made. Left out to dry, renters are beginning to turn against the Conservative vision. The election numbers tell the story of this left-ward drift of the rental sector: 29 per cent of private renters voted Labour in 2010, 39 in 2015, and 54 in June.

Philip Hammond’s budget – which, despite its radicalism, continues to ignore the welfare of this rental population – is unlikely to reverse this trend. Generation Rent is no longer simply a class in itself — it is becoming a class for itself, as well.

We appear, then, on the verge of a paradigm shift in housing policy. As the demographics of the housing market change, so must its politics. Wednesday’s budget signals that even the Conservatives – the “party of homeownership” – recognise the need for change. But it only goes halfway.

The gains for any political party willing to truly seize the day – to ditch the property-owning dream once and for all, to champion a property-renting one instead – are there for the taking. 

David Adler is a research association at the campaign group Generation Rent.

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