We all suspected it, and now we have proof.
Adding better quality ‘green infrastructure’ and natural areas to our urban environment pays dividends by increasing property values. Offering a suite of benefits, natural systems cool and cleanse our cities while adding beauty and a welcome serenity amongst the hustle and bustle. It’s no wonder people will pay more to live in greener suburbs.
Practitioners have long been promoting the benefits of designing in trees, open spaces and natural waterways into our cities, but have found themselves having to draw on economic data from afar – predominantly from the US and the UK, and often rather out of date – then trying to ascertain some kind of loose comparison to the Australian context. Critics gleefully poked holes in the data and asked how anyone could be sure it was the greening that made the difference to price hikes in the property market.
Well, the wait is over. Recent investments in research in Australia have yielded examples and data that – surprise, surprise – show that urban greening does indeed increase the value of property. The Cooperative Research Centre for Water Sensitive Cities and the University of Western Australia released data from a study area around Bannister Creek in Perth.
The term ‘creek’ was an overly complimentary description for the waterway at the beginning of the project. It would have been better described as an urban drain, which had been highly modified, deepened and straightened, bearing little resemblance to its natural state. The drain was relatively bare and industrial in style, offering very little amenity value to the neighbouring properties. A restoration project then re-shaped and re-vegetated the stream to create a fully functioning wetland ecosystem.
A hedonic pricing analysis, which controlled for other influences on property values over the 10-year period, demonstrated that the restoration work achieved a 4.4 per cent increase in property prices for homes within 200 metres of the project site – amounting to $17,000 to $26,000 above the trend increase in house values in the area. The benefits exceeded the cost of the investment, with the restoration project achieving a benefit-cost ratio of 2.5:1.
This kind of data can be used to produce a business case for green infrastructure and water sensitive urban design in our cities, according to Kym Whiteoak, a senior economist at RMCG.
“Used carefully, this type of study can be adjusted for contextual differences and applied to other urban areas as part of an economic evaluation,” Whiteoak said.
What’s more, the good news isn’t just for home-owners. Local councils, who are the most likely candidates for investments in improving urban landscapes, could also stand to benefit from an increase in revenue from property taxes which are often related to property values.
An important part of the emerging evidence is that it’s not just the presence of green areas that makes the difference – it’s the quality of design and community access. Further research in the northern suburbs of Melbourne has reinforced the findings in Perth that the transformation of mono-functional urban drainage assets into multi-functional open space assets adds substantial value. In this case, drainage assets owned by Melbourne Water – often blank grassed areas reserved for flood water retention – were compared with quality parks and recreational spaces that are accessible to the local community.
“We found that replacing the ‘blank canvas’ of a grassed area with an aesthetic playground park was worth an additional two per cent in value to surrounding properties” said Whiteoak.
The evidence base is building. There is real value in integrated design which seamlessly brings together natural assets within urban environments – all that’s left to do is to make the investment.