Property values, parks and crime: A hedonic analysis in Stockholm, Sweden

Abstract: A park is a desirable feature when people are purchasing a property. Buyers are ready to pay more for properties surrounded by natural amenities, such as a pleasant park. However, if a park is perceived as unsafe by local residents, then it may have a negative effect on housing prices. The aim of this study is to investigate the importance of urban parks in Stockholm, capital of Sweden, and to find evidence of whether people in Stockholm are willing to pay extra for parks when purchasing an apartment. This study hypothesized that people’s willingness to pay for urban parks and green spaces is affected by crime. The methodology had two stages. An extensive field work was performed in a selected number of parks to help characterize the parks in Stockholm. This was later followed by the analysis of 2008’s apartment sales using hedonic modelling combined with Geographic Information System (GIS) techniques. Results suggest that the effect of parks vary by park type. An aggregated measure of parks lower apartment prices but the effect turns out to be positive in some cases, or insignificant, when parks are broken down by types. For instance, parks with cultural features, forest feeling, skating and features of national interest increase apartment prices. However, if park have ball games, marina, boating facilities, skate board facilities and frequent social events – these features tend to reduce property values. These findings support the idea that the impact of park on property value depends on the type of park. Contrary to was expected, the park impact on prices does not seem to be affected by seasonal variations (e.g., summer versus winter), only individual months seem to affect prices. More interestingly, crime affects the quality of parks and, in its turn, the relationship between parks and prices. Results show that parks that originally show a positive impact on prices may affect prices negatively if they have relatively high rates of violence and vandalism. The study finalizes with a discussion these results and their implication for future research.