Many people fear that new housing development will worsen local amenities, reduce their wellbeing and perhaps even undermine the capital values of their home – often regardless the quality of the development envisaged or whether there is a shortage of homes to meet local needs

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11/07/2017 Blog: Does residential development always drive down local prices? | Accelerating housing production in Londonhttp://lselondonhousing.org/2015/07/the-impact-of-new-housing-development-on-surrounding-areas/ 1/6  2 Comments  Posted on July 27, 2015 by lselondonBlog: Does residentialdevelopment always drivedown local prices?The impact of new housing development onsurrounding areasChristine Whitehead and Emma Sagor, LSE LondonMany people fear that new housing development will worsen local amenities,reduce their wellbeing and perhaps even undermine the capital values of theirhome – often regardless the quality of the development envisaged or whetherthere is a shortage of homes to meet local needs.The question of the impact on house prices is never directly addressed during theplanning process as price impacts are not a material consideration in planningdecisions. Yet prices can be expected to adjust to changes in amenity and localservices arising from the development as well as simply to the numbers ofdwellings on the market. Uncertainty about potential price reductions, or even justslower capital appreciation is undoubtedly often part of people’s objections tochange, not only in the immediate neighbourhood but also in the general locality.It was in this context that LSE London was asked by the NHBC Foundation andBarratt to address an apparently straightforward question: ‘Does new housingdevelopment always reduce the value of existing properties around thatdevelopment?’ The question was put this starkly because the project was seen as apilot – perhaps leading to a more detailed examination of the impact ofdevelopment in different contexts.HOME INTERACTIVE MAP THEMES ABOUT EVENTS MEDIA PUBLICATIONS11/07/2017 Blog: Does residential development always drive down local prices? | Accelerating housing production in Londonhttp://lselondonhousing.org/2015/07/the-impact-of-new-housing-development-on-surrounding-areas/ 2/6Last month we published the research which used statistical and qualitativeevidence to look at the impact of eight average sized (60 – 280 units) newdevelopments completed within the last  ve years on their immediateneighbourhoods and wider local areas (Whitehead et al, 2015). The evidenceoffered a clear answer to our research question: no, house prices do not alwaysdecline around new housing developments, at least not for a sustained period oftime. Sometimes there were short term price reductions during or immediatelyafter the construction period. More generally prices in the wider area continued tofollow existing upward trends. In the immediate locality—within a 0.3 mile radiusof the new development—prices in some cases rose more quickly than in the widerarea once the development was completed.Looking in more detail at the chosen sites, three were on brown eld land whereexisting buildings had become obsolete. In these cases there were few or no localobjections, the impact on prices was generally positive and everyone seemedcomfortable with the resultant development which had helped raise housingstandards in the neighbourhood. The other  ve on the other hand had been thesubject of considerable objection based on concerns around loss of amenity, theprovision of affordable housing and increased use of local services. Figures 1 and 2show trends in prices for the immediate locality and the wider area around these ve developments. Even though the numbers of transactions are often small theysuggest that, once completed, the developments generally had a positive impacton the immediate neighbourhood and blended into the wider local market.Objections generally fell away and in some cases objectors actually bought some ofthe new homes.Figure 1: Average house price trends in areas immediately neighbouring (0.3 mileradius) development on green eld/high amenity land11/07/2017 Blog: Does residential development always drive down local prices? | Accelerating housing production in Londonhttp://lselondonhousing.org/2015/07/the-impact-of-new-housing-development-on-surrounding-areas/ 3/6Source: Whitehead et al (2015); data from Hometrack (2014).Figure 2: Average house price trends in wider areas (postcode districts) aroundnew development on green eld/high amenity landSource: Whitehead et al (2015); data from Hometrack (2014)Some commentators have argued that these  ndings refute the argument thatlarge scale new investment will stabilise or even lower house prices in general. Butthis is to mix macro and micro effects. Here we were looking only at local impactswhere the new homes are purchased both by locals and incomers and in somecases may actually have generated additional demand. The core implication is thatthe ‘chain’ of transactions arising from buyers selling their own homes appears tohave been easily absorbed. The effect on local prices is more about the quality ofthe development, the numbers of additional households able to  nd a home theywant and the extent to which planners and developers manage to maintain andimprove the immediate locality. Any downward pressure on prices is spread acrossthe whole housing market – and in that context a few hundred new homes is adrop ocean in terms of its effect on house prices overall.11/07/2017 Blog: Does residential development always drive down local prices? | Accelerating housing production in Londonhttp://lselondonhousing.org/2015/07/the-impact-of-new-housing-development-on-surrounding-areas/ 4/6← The increasing complexities of the welfare capWorkshop: The role of Housing Associations in accelerating residential development inLondon →Are these results important? They certainly show that house prices do not alwaysdecline as a result of new development despite widely held fears that they do,which fuels much opposition to new house building. Importantly the research didnot look at very large scale developments which disrupt the area for long periods,but at the more usual types of development outside central urban areas. And evenin this context it should be stressed that this was very much a pilot study and farmore research needs to be done on exactly what enables new development to beintegrated into local markets The  ndings suggest that those living in the areashould not generally be concerned that they will lose out just because newdevelopment occurs in their neighbourhood. They also imply that local plannersoften do a good job in offsetting the negative impacts of development through therequirements they place when giving planning permission.  Category: New Housing and the London Plan, Recent News, Reports, Uncategorized2 Comments on “Blog: Does residentialdevelopment always drive down localprices?”Jade Brunet  September 15, 2016  Thank you for sharing this information about local prices withresidential development. It is good to know that the impact onprice was generally positive and that people were comfortable with thechange. Something to consider would be to talk to the realtor of theresidential land to get more detail of what the process should entail.intuitionsoftech  October 11, 2016  Reply11/07/2017 Blog: Does residential development always drive down local prices? | Accelerating housing production in Londonhttp://lselondonhousing.org/2015/07/the-impact-of-new-housing-development-on-surrounding-areas/ 5/6Comfortably, the post is actually the sweetest on this deservingtopic. I concur with your conclusions and will eagerly lookforward to your upcoming updates. Saying thanks will not justbe adequate, for the phenomenal lucidity in your writing. I willright away grab your rss feed to stay informed of any updates. Pleasant workand much success in your business endeavors!================= New residential developments===================Leave a ReplyYour email address will not be published.Required  elds are marked*CommentName*Email*Reply11/07/2017 Blog: Does residential development always drive down local prices? | Accelerating housing production in Londonhttp://lselondonhousing.org/2015/07/the-impact-of-new-housing-development-on-surrounding-areas/ 6/6Contact us:Twitter - @LSE_LondonFacebook - LSELondonGeographiesYouTube - LSE LondonEmail - lselondon@lse.ac.ukLogos and map designed by Alessandra Mossa. Website designed by Marshall Bradley.Copyright © 2017 · All Rights Reserved · Accelerating housing production in LondonWebsite Notify me of follow-up comments by email. Notify me of new posts by email.Post Comment

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