This research paper explores the heritage housing market in Sydney. The aim of the research was to try and estimate the market price difference between heritage-listed and regular, unlisted houses. Together with this aim, the research tried to examine the relationship between market price and the level of heritage significance of heritage houses. The reason why such research was carried out was because there have been no substantial studies in the area of heritage in the housing market.
Consequently, eight suburbs in Sydney were used to define the sample. Deodhar notes that, “market preferences are determined by consumer tastes and latter in turn are governed – though not entirely – by people’s income, education and occupation profiles, ethnicity, family structures and stage of life. [Therefore], by selecting suburbs with similar demographic, ethnic and socio-economic profiles, the likelihood of identifying a homogenous market would be maximised” (Deodhar, 2004). Data from 64 listed houses and 76 unlisted were collected with the following taken into account; Land size, number of rooms, quality of house interior, estimated age, street access, swimming pool, east or west of the railway, proximity to train station, proximity to business district, traffic levels on street, whether or not heritage-listed, time of sale and heritage significance level of a listed property.

After extensive research over several years, it was found that heritage- listed houses were found to enjoy a premium over unlisted houses. “This premium is a measure of the combined value placed by the market on both, the heritage character of houses and their statutory listing status” (Deodhar, 2004). The average price for listed houses was $1.2 million compared to $0.8 million for unlisted ones. While the cheapest property in both groups was priced at about $0.35 million, the most expensive heritage-listed property sold for $3.8 million in contrast to $1.9 for an unlisted one.

As well as this, the second aim of the research was to examine the relationship between the heritage significance of a house and its market price. It is common knowledge that there is a wide variation in the level of historic or even cultural values a heritage property owns. Deodhar explains this, “a historic house associated with the life of a famous Australian person may enjoy a heritage value that is higher or lower compared to a historic house valued for its distinctive architectural design. Similarly, a historic house with most of its original features intact is likely to represent a higher heritage value than a house which has lost some of its original features but is otherwise in outstanding condition” (Deodhar, 2004). However, the research found that there is a premium one pays for a ‘higher listed’ heritage property than that to a ‘lower listed’ one. This premium reflects the combined value that the market places on their heritage character, their architectural style elements, and their statutory listing status.

“In sum, this market [the 8 suburbs in Sydney] appears to support conservation of heritage- listed houses” (Deodhar, 2004).

Questions to think about...

• Do our councils in Melbourne value heritage? If not, should they value heritage more? How can they do this?
• Which suburbs in Melbourne have a healthy market for heritage listed homes? Is this because of council regulation?
• Would you consider buying a heritage listed property over an unlisted property? Why/why not?
• Do you think that heritage listed properties should sell for more or less than an unlisted property?
• Is there scope to keep heritage listed buildings and provide higher density housing in the same suburb? Or do we have to leave heritage listed suburbs as low-density areas?

Reference:

Deodhar, V. (2004) “Does the Housing Market Value Heritage... Some Empirical Evidence” Macquarie Research Paper, No. 3

9. Planning Economics 2nd May, 2008 14:46:34   [#] 

Comments

Deodhar, V. 2004 “Does the Housing Market Value Heritage... Some Empirical Evidence”
Melbourne’s councils (particularly in inner suburban areas) do value heritage areas, as demonstrated through the strict development controls applied to properties of heritage significance. It is important that these areas are preserved, however there must still be some allowance for incorporating higher density development. Perhaps councils need to identify fewer areas which are of the highest level of heritage value, while reducing development controls for others of a lesser significance. The planning scheme stipulates that new developments must respect the existing character of the area. Development within heritage areas should be possible if sympathetic design solutions are applied.

I think purchasing a heritage listed property appeals to many people as it provides some reassurance that the character of the area is protected. These properties are more valuable as they are in limited supply.

JM  3rd May, 2008 10:53:35  

Deodhar, V. 2004 “Does the Housing Market Value Heritage... Some Empirical Evidence”
I agree with JM regarding the need to identify and reduce development controls for areas of lesser heritage significance. This was also raised in my article, Productivity Commission for the Conservation of Historical Heritage Places, which touched on the large areas covered by Heritage Overlays.
The City of Yarra was one big example, where 'up to 80 per cent of all properties (Productivity Commission, p.287)' is listed as a heritage zone.

The sheer scale of heritage zoning is unaffordable, with 20% of Victorian listed property in poor or very poor condition — with many losing or having lost their heritage significance (Productivity Commission, p.24).
The coverage of Heritage zones definitely needs to be reduced, but it is enlightening to hear that proper heritage sites are retaining and having their value added to because of its heritage-listed status.

Aileen  4th May, 2008 00:18:12  

Deadhar, V. 2004 'Does the Housing Market Value Heritage... Some Empirical Evidence?'
Do our councils in Melbourne value heritage? I can say yes for Hume City Council (HCC) and Melbourne City Council (MCC).
Within Urban Land Corporations recent development of Roxburgh Park, HCC zoned the areas around the old homestead which is from the mid 1800’s. It was part of Hume’s farming history (social and cultural significance) and also the old homestead is classified as a heritage listed building for its architectural significance. To further ensure the building did not become derelict, Hume developed the homestead into a suburban learning centre where residents and groups could meet and provide short courses on arts and crafts.
MCC, an inner city council is very serious about preserving heritage value. Within MCC’S planning department, a Heritage Planner is part of the development team so that their expertise is used for the planning applications which require heritage planning. These two councils protect heritage areas or heritage structures with the heritage zones and the heritage grading of the buildings themselves. A building can be listed as having a heritage grading of A, B, C and D. Grading ‘A’ being the most significant and grading ‘D’ the least significant.
I would consider buying a heritage listed property as they are more significant from properties that do not have a heritage grading. I would prefer to own a property that is graded as being cultural, social, historic or architectural significance to the area or locality. I may consider though buying a building with a heritage grading of ‘C’ or ‘D’ as these buildings can accommodate internal and external renovations. However a building with a heritage grading of ‘A’ and ‘B’ often do not allow for external changes and heritage grading of ‘A’ is very conservative with any internal changes.

These heritage listed properties would sell for more, although they might contain restrictions that non-graded buildings would not have, as they would be a unique property within the housing market.

I think suburbs that have a high percentage of heritage listed buildings can provide for some higher density developments as long as they are sympathetic to the surrounding streetscape and building forms. This can be well accommodated by planners as we have been taught on how best to achieve this.
Some ways would be to allow for gradual setbacks from single storey buildings, using similar buildings materials as surrounding heritage listed buildings and to not directly reproduce heritage style buildings but to incorporate some old design elements into new design elements. Good architecture and urban design can always allow for development in heritage significant areas and this is why I think there is no need for a reduction in heritage zones. If it was not possible then I think city councils would not favour protecting their heritage significant areas.
B.T. (Bachir Tanios)  6th May, 2008 00:00:56  

Deodhar, V. 2004 “Does the Housing Market Value Heritage... Some Empirical Evidence”
As far as I know, Toorak is one good example of heritage zone in Melbourne. I also agree with the others. It is good to keep the heritage zones so that the culture is remain still. But it is also nice to see less – heritage zones developing with variation of architectural elements. As said in my readings about Property in a Complex World, people should be let free and creatively build their habitat.
Sun``  6th May, 2008 11:54:56  

Deodhar, V. 2004 "Does the Housing Market Value Heritage..Some Empirical Evidence"
Our Melbourne councils do value heritage, and it is clear in the ever amounting mass of controls to regulate development in heritage listed areas.
I was working on a proposal, in the city of Yarra, which consisted of constructing minor works to a heritage listed dwelling. The works were extremely minor and added significant aesthetic value to the area, and by looking around the surrounding neighbourhood it was evident that the area was run down and needed some form of redevelopment. However because the dwelling was covered by heritage controls, the process for obtaining a planning permit took up significant time and money, where it was obviously unnecessary.
As such, I agree with Aileen that controls for areas of lesser heritage significance need to be re-evaluated to enable such areas to be improved without such delays.
sarah  6th May, 2008 15:09:42  

Deodhar, V. 2004 “Does the Housing Market Value Heritage... Some Empirical Evidence”
So, Deodhar appears to wax lyrical about the sustained value of heritage places thanks to their heritage listing, which - generally speaking - translates to planning protection. This view focuses on the relationship between perceived heritage value and actual market value, as though heritage is the key driver of ‘premiums’. This may well be true, but on the flipside – does heritage effectively place a ceiling on the property value also? If we’re looking at grand single homes on hefty chunks of land (so, perhaps as seen more in pockets of Stonnington than Yarra), is the market realising the true potential value of the land when it could be accommodating a contemporary medium-density residential or mixed-use development? Consider this as applied to Deodhar’s Sydney study, and perhaps throw harbour views into the mix – for one or for many? Unthinkable, perhaps, but probably what keeps some rampant property developers awake at night.

In the case of Melbourne, I think the Heritage debate is a good example of the fact that we are rapidly approaching (if not already bogged in) a period where tough decisions need to be made to enable real, meaningful progress in Planning terms. As mentioned above, Melbourne has vast swathes of inner suburbs and municipalities that unwittingly act as obstacles in the pursuit of key strategic objectives such as increased densities, particularly around areas well serviced by public transport and other infrastructure. It would appear to be an untenable situation.

Perhaps this is will be an area that could see Mr Brumby come through with ‘the goods’; a debate more suited to his black-and-white character that seemingly lacks the celebrated sentimentality of his predecessor. (I personally cannot imagine a hard-line public re-think of Heritage value and zoning ever being entertained by the previous Bracks government.) We may bemoan his manner, but Brumby is certainly not shy of decision making driven by raw ‘need’ and an economic imperative. Although, we may be getting a tad ahead of ourselves to imagine such a debate being a priority beyond the confines of this class just yet!

(It would be very interesting to see the political wash-up of this kind of debate though, with the Greens snapping at the heels of Labor’s historic stronghold over the inner city areas. If amending heritage value and related planning restrictions paved the way for more residential development leading to greater housing choice and a more sustainable population growth (as opposed to sprawl), would it not be a leaf out of the Greens book, also? Hmmm…)
nf  23rd May, 2008 02:25:58  

Deodhar, V. 2004 “Does the Housing Market Value Heritage... Some Empirical Evidence”
I noticed it depends on a council by council basis, this argument can be seen in the municipality of Yarra as opposed to Hume (I always use this council as a bad example…). Some areas have a higher concentration of heritage buildings (being Victorian, Edwardian, Georgian, inter and post war designs) so if one municipality has a higher concentration you would expect that council to place more emphasis on heritage. The situation on heritage really depends on the context (that is how many heritage buildings are present)

It seems Yarra has the highest concentration of heritage homes (I think the figure is 80%?), as I mentioned before it comes down to how many heritage buildings are present in the first place. Quite frankly I find some heritage listings and overlays an impediment to urban densification and infill development. We have a policy that aims for higher density development (infill that is) which is often impeded upon by heritage controls. I understand that it shows the world or just people our rich history but the question is, do we need to tag every single building we see? Sooner or later the majority of the inner ring suburbs will be affected by a heritage control. In all honesty heritage is very much like having a monarchy (the queen) it just showcases our old culture, or maybe its just a case of people wanting to retain what ever British culture is left in an age dominated more and more by the asian nations. I am not saying lets forget our history, I am merely arguing that nostalgia should not get the better of us, perhaps take it easy on the heritage controls.
(im so gonna get attacked for this lol)

I would prefer a non-heritage listed property, because it basically means more freedom as to how I develop my house. If I wanted to alter a certain section of it, I do not want to travel to hell and back just to change my doorbell or mail box. The cost of maintaining a heritage property is also a major deterrent.

I think the question of whether heritage is valued more or less comes down to an individuals interpretation, like myself most heritage (I said most not all) pisses me off, so obviously I would prefer it to be valued less, then again some people might see it as rare and exclusive, a piece of british architecture and hence would value it more.

It seems heritage areas and higher density just don’t mix, ive read countless heritage controls over different municipalities and notice a lot of them prefer ‘non dominant’ developments. Then again, it depends on the planner whose in control, he/she may interpret a development different and also the area. If the people cannot be bothered with objections etc, higher density developments may work if you got residents like Camberwellians, then I doubt the two would work together. So in conclusion -
planners interpretation and the populace of the area.

long nguyen  10th June, 2008 00:26:41