Surrounding density and green space. What effects of proximity on land prices?

We aim at measuring the impact of neighbourhood population density and land-use configuration on land prices in Luxembourg. The objective is to identify the importance of the local scale of urban design, with regard to the critics on compact urban development common practice in spatial planning today.

We rely on address-based data for land transactions registered by notaries. Standard controls i.e. access to jobs, plots’ characteristics, socio-economic neighbourhood and service availability are considered at local scale. The originality lies in the land-use and population density data, which is available at a very fine scale. Hence different sizes of neighbourhoods around the sold land plots can be tested to identify at what extent different land-uses and their configuration are valued by residential land consumers. Further, we test whether consumers’ preferences for population density are varying with distance to the plot.

In this perspective, we apply the hedonic pricing method, with the focus is turned to spatial econometrics, testing different approaches and spatial weight matrices, and how to consider time and repeated sales.

Results are expected to test (i) that consumers value the availability and diversity of green land uses differently with distance; and (ii) that preferences for population density vary with distance. We hypothesize that increased population density in immediate proximity is valued negatively, but at some distance to the plot this impact may become positive.