Spatial planning procedures and property prices: The role of expectations

The objective of this paper is to show if, and to what extent, spatial planning procedures affect residential property prices. To answer this question we used data on residential property prices from an area in the Netherlands called Midden-Delfland. In this area policy plans and decisions on the construction of the highway A4 have been made since the 1960s. However, the plans have yet to be executed. The data we used are from the period 1996 to 2006. Using a hedonic pricing method we were able to investigate the effect of the policy plans and decisions made on property prices in this period. When the construction plans seemed to be rather definitive, sellers and buyers on the market for residential properties wanted to pay significantly lower prices for properties in close proximity to the planned A4. However, if plans fell apart, because of protests or other reasons, the prices sellers and buyers wanted to pay were insignificantly affected by the proximity to the planned A4. Outcomes of this research could be used to develop efficient compensation schemes helping to reduce resistance against large infrastructural plans.

Research highlights▶ Property prices in close proximity to planned highways are lower when construction plans are rather definitive. ▶ If plans for extending the highway fall apart, property prices are not affected by the proximity to the planned extension of the highway. ▶ Homeowners are affected during spatial planning processes. ▶ Property prices near existing highways are negatively affected up to a distance of about 1 km. ▶ Both spatio-temporal lags and spatial errors are present in the data.