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The influence of urban and natural amenities on second home prices

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Abstract

This paper estimates a spatial hedonic model to examine the influence of urban and natural amenities on second home prices in south Sweden, incorporating local and regional heterogeneity. With the results obtained in this paper, several important relationships between amenities and second home prices are revealed and price formation in this particular study region is indicated to be strongly related to place-specific factors, regional context and amenities. Key findings show that natural amenities have a significant influence on pricing of second homes when located in regions classified as rural, whereas access to an attractive local house market is shown to be more important for prices of urban second homes.

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Notes

  1. See, for example, Marjavaara (2008) for a more through conceptual discussion on second homes and second homeownership.

  2. The Swedish Board of Agriculture (2012:19).

  3. There are 290 municipalities in Sweden forming the lowest level of local governments. In this paper, regions are used to denote municipalities.

  4. Statistics Sweden (Yearbook of housing and building statistics, 2012).

  5. Lantmäteriet.

  6. This geographical delimitation was chosen for two reasons. The first is related to data obtainability, transactions data have restricted public access and are rather costly to obtain. Second, Sweden is a country that stretches over many different climate zones and the type of natural qualities that can be found in the northern parts (e.g., peripheral mountain areas and forest areas) are very different from those in the southern parts (e.g., preserved open space, semi-natural grasslands and attractive coastal areas). Since the focus of this study is these later types of nature based amenities, transactions data from the nine southern counties in Sweden are included in the analysis.

  7. The purchase price coefficient is calculated as the sales price divided by the assessed property value. Representative transactions are those that have a coefficient smaller than 0.6 and larger than 6. This implies removing 1,734 transactions that had either to low purchase price (>50,000) or a purchase price coefficient outside the suggested range. Examination of the removed transactions shows no systematic patterns in their distribution across the study area or in their housing characteristics.

  8. See Jackson (1979) for a full description of the details of this model.

  9. These data are obtained from the TUVA database from the Swedish Board of Agriculture containing data on semi-natural meadows and pastures with high biological and cultural values in Sweden. These data are obtained through a nationwide inventory carried out in 2002–2004. Semi-natural qualities of the agricultural landscape are considered as an indicator of High nature value farming (Paracchini et al. 2008).

  10. The selection of areas of interest for outdoor recreation is done by the Swedish Environmental Protection Agency in cooperation with the county administrative boards (among others). The Swedish Environmental Code (Miljöbalken) demands that these areas be protected against measures that can significantly harm the natural or cultural environment. In some cases, these are designated as nature reserves. These data are obtained from the county administrative boards http://www.gis.lst.se/.

  11. The functional form is logarithmic to capture diminishing effects in structural characteristics and distance variables (Andersson 1997; Mahan et al. 2000), also shown to correct for heteroskedasticity.

  12. The amenity coefficients across the urban–rural range are statistically different from each other. This is confirmed by looking at the confidence intervals and by a Chow test of equality of coefficients.

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Acknowledgments

The Swedish Heritage Board is gratefully acknowledge for providing funding for this research project.

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  1. Jönköping International Business School, Centre for Entrepreneurship and Spatial Economics (CEnSE), P.O. Box 1026, 551 11, Jönköping, Sweden

    Pia Nilsson

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Correspondence to Pia Nilsson.

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Nilsson, P. The influence of urban and natural amenities on second home prices. J Hous and the Built Environ 30, 427–450 (2015). https://doi.org/10.1007/s10901-014-9421-6

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