Revealing preferences of Prague's homebuyers toward greenery amenities: The empirical evidence of distance

Revealing preferences of Prague's homebuyers toward greenery amenities: The empirical evidence of distance–size effect

Melichar, Jan / Kaprová, Kateřina

Highlights ► Large urban vegetation has a clear effect on property prices up to 2km. ► Agricultural land of low ecological value is not reflected in the property prices. ► The proximity principle proved for urban forests and protected areas. ► Smaller greenery plots are sufficient for residents as proved by distance–size effect. ► 1% rise in greenery coverage increases aggregate housing prices by 261–1221millionCZK.

Abstract The proximity principle of urban greenery and its positive effect on the prices of residential buildings is well documented in empirical literature. Application of hedonic price method in many urban and environmental settings has confirmed the proximity principle indicating residents’ positive preferences toward environmental amenities provided by green spaces. As proved in previous applications, the proximity effect lowers with increased distance from the dwelling, and the extent of the citizens’ demand for urban open space also differs with type and size of open space. The empirical evidence is relatively scarce with respect to combining both the distance to and the size of the nearest greenery. The majority of hedonic price studies on green space services have been conducted in the US and Western Europe, but the empirical evidence from the transforming economies of the former communist states of Central Europe is scarce. Similarly to many other European cities, urban sprawl has threatened green areas and agricultural land in Prague since the starting of the transformation process at the beginning of the 1990s. Therefore, our intent is to contribute with two aspects: (i) trace the value of urban greenery amenities on the housing market in the newly transformed economy using a hedonic price model and (ii) capture the distance and size joint effect of green space on the property market by interaction effects. The study confirmed that proximity to greenery and its area are important determinants of housing prices in Prague, and benefits to residents differ with the type of greenery.