Valuing Location in an Urban Housing Market
It is often said that the most important factor in determining house prices is location, location, location. So it is surprising what little research has been done in a UK context on the importance of locational externalities, particularly within urban housing markets. A reason for this lies in a lack of understanding to how socio-economic processes operate at various spatial scales, and how this relates to the fabric of the built environment. For instance, it is typical to treat urban housing markets as spatially uniform, with little or no consideration to the buildings, streets and neighbourhoods within which it operates. This has inevitably led to modelling difficulties and inconclusive results. However, by modelling house prices and locational externalities within a multi-levelled framework, many of the previous conceptual and technical problems may be resolved. This paper will demonstrate how an urban GIS has been developed that links data across several spatial scales, and how the Ordnance Survey ADDRESS-POINT product has allowed locational data to be georeferenced at the level of the individual property. By utilising ARC / INFO tools such as GRID and NETWORK, the paper shows how the complexities of locational externalities can be untangled. Finally, the paper will discuss some of the results with respect to the valuation of specific externalities, such as access to parks, schools and the influence of non-residential land-use. The paper concludes that an appreciation of the spatial scales of the built environment is crucial if the effects of location are to be valued correctly.