The effects of cultural heritage on residential property values: evidence from Lisbon, Portugal

Historic cities are identifiable through their iconic monuments and buildings. Location relative to these structures generate premiums in the housing market. We examine the impact of such historic amenities on housing prices in Lisbon, Portugal. Results reveal heterogeneous impacts from different types of monuments. Churches, palaces and stone architecture have their own unique impact on the market and landmarks generate the highest premiums.

Residents value living in proximity to a non-landmark church (yielding a premium of 4.2% for living within 100 meters), however higher concentrations of these churches in 1000 meters tend to have a negative impact of 0.1% of the property value. Although having one nearby may be of benefit, additional churches beyond the first serve little purpose and may have negative externalities with bell tolling and high activity during services. With more activity around landmark churches, which draw in tourists and those not in the congregation, this negative impact on price for higher concentrations in 1000 meters is more pronounced at 3.4%.

Palaces, stone architecture and historic monuments which tend to be more aesthetic rather than providing an active service to the community tend to have positive impacts on housing prices in the vicinity with landmark and non-landmark stone architectural structures positively influencing prices in the order of 2.9% and 0.7%, respectively. These impacts however vary across space with historic monuments and surrounding open spaces complementing each other and having a combined positive impact, suggesting that greening policies that increase open spaces near historic monuments can add additional premiums.

Under a constrained budget, decisions on the preservation and maintenance of historic amenities should target those with the highest potential spill-overs. If these investments are valued through the housing market as our study suggests, there are important discussions to have regarding increases in property tax revenue while balancing gentrification.

Click here to go to the paper by Sofia F. Franco and Jacob L. Macdonald.