Property & Greenspace
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Property & Greenspace Australia April 2021 About CoreLogic CoreLogic is a leading property information, analytics and Contact services provider in the United States, Australia and New Zealand. CoreLogic helps clients identify and manage growth opportunities, improve Call us 1300 734 318 performance and mitigate risk, by providing clients with innovative, [email protected] technology-based services and access to rich data and analytics. Whilst all reasonable effort is made to ensure the information in this publication is current, CoreLogic does not warrant the accuracy, currency or completeness of the data and commentary contained in this publication and to the full extent not prohibited by law excludes all loss or damage arising in connection with the data and commentary contained in this publication. Author: Anna Russell, Senior Professional, Consulting & Risk Management corelogic.com.au 2 What value does the property market put on greenspace? Greenspace has a known value in improving mental and physical health as well as perceived wellbeing. Other benefits include increased levels of resident exercise and A large proportion of the prior studies investigating price potential for reduction in crime. International studies have premiums on greenspace have been conducted in the Northern suggested that the positive effects of greenspace may translate Hemisphere, with only one substantial study (Lockwood & to a price premium for residential property, with both proximity Tracy, 1995) conducted in Australia. The Australian property to public greenspace and the presence of private greenspace market, and the manner in which the Australian public relate to having the potential to encourage a price premium in certain and value property, is distinctly different to other markets; as a markets. result the value ascribed to greenspace may also be different. Whilst property ownership is proportionally low in many This paper explores the benefits of greenspace and the European nations, and multiple property ownership is overseas evidence for a price premium in ‘green’ locations, and uncommon, Australia has a relatively high rate of home then utilises a blend of CoreLogic and public data to conduct an ownership, and property as an asset class for wealth building is initial investigation into whether the Australian market also a popular option amongst investors. Further, the parameters of considers greenspace worthy of a price premium. the Australian mortgage market do not allow for non-recourse default in the same way as the US. This means Australian The term ‘greenspace’ refers to land that is partly or completely homeowners are more likely to ‘stick it out’ when their covered with grass, trees, shrubs or other vegetation.1 In the ownership position is not ideal. We see examples of this in how context of cities, greenspace includes parks, community Australians responded to the 2020 Black Summer fires and also gardens, cemeteries, school yards, playgrounds and vacant lots. tropical cyclones such as Cyclone Debbie in 2017. Greenspace may be public and available for all members of the community to benefit from, or it may be privately owned such as large yards or gardens. In academic studies, greenspace is often measured using a measure called “Normalised Difference Vegetation Index” which is derived from satellite imagery. 1 https://www3.epa.gov/region1/eco/uep/openspace.html 3 Access to nature makes us healthier, happier and more resilient There is a large body of literature across both health science The study found that living within 300m of public green space and urban planning disciplines evidencing health and wellbeing had a significant effect on perceived wellbeing of residents in a benefits from exposure to nature. A particularly significant densely populated urban setting. It also found that perceived example is Engemann et al’s report published in 20192, wellbeing went up significantly as the area of greenspace examining the impact of greenspace exposure on mental available increased.3 health. The study used satellite imagery to determine the Normalised Difference Vegetation Index (NDVI) within a 210m x Greenspace also has the potential to improve a range of 210m square around the residence of 943,027 Danish children physical conditions, most specifically those associated with the from birth to the age of 10 years. Across this large cohort the western lifestyle – obesity, hypertension and blood sugar study found that the impact of greenspace on a person’s disorders, which frequently co-exist as metabolic syndrome. A likelihood to express a psychiatric disorder was comparable to longitudinal study of 6,000 British adults from 1997 to 2013 other factors such as family history and parental age, higher found that long term exposure to greenspace appears to play than urbanisation and slightly lower than parents’ an important role in preventing metabolic syndrome as well as socioeconomic status. Mood disorders, depression, anxiety reducing or preventing the individual components of the and somatic disorders were most closely linked to NDVI levels disorder such as high blood lipid concentration or 4 indicating that permeation of high-quality greenspace into hypertension . Given the burden these illnesses place on the urban areas might counter many of the woes thought to be due public health system in western countries, plus the inherent to population density and general features of urban living. utility of parks for play and socialisation, provision of greenspace seems a particularly low cost and effective way to These findings are supported by a UK study conducted by reduce the burden of public health costs and deliver a healthier Newcastle University, University of Warwick and University of happier urban population. Sheffield, and published in Applied Geography Aug. 2019. 2 Engemann, E., Pedersen, C., Arge, L., Tsirogiannis, C., Mortensen, P. & Svenning, J., Residential green space in childhood is associated with lower risk of psychiatric disorders from adolescence into adulthood, Proceedings of the National Academy of Sciences Mar 2019, 116 (11) 5188-5193; DOI: 10.1073/pnas.1807504116 3 Houlden, V., de Albuquerque, J.P., Weich, S. & Jarvis, S. ‘A spatial analysis of proximate greenspace and mental wellbeing in London’, Applied Geography,Volume 109,2019. Sourced at https://www.sciencedirect.com/science/article/pii/S0143622818312384 4 https://www.salud.carlosslim.org/english2/living-near-green-spaces-is-associated-with-a-lower-risk-of-met abolic-syndrome/#:~:text=NOTICIAS-,Living%20near%20 green%20spaces%20is%20associated%20with%20a%20lower%20risk,conditions%2C%20including%20obesity%20and%20hypertension. 4 Proximity to nature positively impacts urban housing prices – in some settings A meta-analysis of 37 hedonic pricing studies across Europe, North America and Australasia found that urban nature, such as parks and forests, has positive impacts on house value in the areas surrounding it.5 The authors then further interrogated this relationship through a detailed case study in the Dutch city of Utrecht, finding that the presence of urban nature such as reserves, green corridors and play-spaces drove increases in local property values of up to 20% compared to areas in which urban nature was absent. The analysis concluded that both organically situated and man-made urban nature settings can offer both human and price benefits, and that this may apply across a wide range of locations and settings. Closer to home, the 2013 study ‘Valuing Victoria’s Parks’6 showed a 5-7% increase in home value for properties immediately adjacent to parks in Melbourne, with similar data also found for Perth by McIntosh et al. in 2014.7 Lockwood & Tracy’s 1995 analysis hints at potential price effects in Sydney, although it deals with a very specific scenario of proximity to Centennial Park.8 5 Brander, L. & Koetse, M., The value of urban open space: Meta-analyses of contingent valuation and hedonic pricing results. Journal of Environmental Management, 16 July 2011. 6 Parks Victoria (2015). Valuing Victoria’s parks, Parks Victoria, Melbourne. Sourced at https://soe.environment.gov.au/theme/built-environment/topic/2016/ livability-urban-amenity. 7 McIntosh J, Trubka R & Newman P (2014). Can value capture work in a car- dependent city? Willingness to pay for transit access in Perth, Western Australia. Transportation Research Part A: Policy and Practice 67:320–339. 8 Lockwood & Tracy, 1995. In Brander, L.M. & Koetse, M.J. The value of urban open space : Meta-analyses of contingent valuation and hedonic pricing results. Journal of Environmental Management, 16 July 2011. 5 Case Study – Sydney and Surrounds: Association between proximal greenspace and house prices Our case study evaluates the extent to which the presence of Other property features known to influence price such as land greenspace in general and more intensely vegetated size, distance to employment, build quality and number of greenspace forested with trees more than 3m in height co-vary bedrooms are likely to interact with and mediate the influence with residential property prices, based on transactions across of greenspace. Our intention here is to determine if there are Greater Sydney in 2019. We define these two greenspace types indications of a price effect, in order to establish the case for a as ‘greenspace’ and ‘tree cover’ for the purpose of this analysis. more detailed nationwide study prepared in the coming months. As a representation of these greenspace measures, we leveraged a pre-aggregated mesh block level summary of NDVI Preliminary analysis of data indicated mesh block pricing data data prepared by the NSW Dept. of Planning, Industry & was sparse in some locations due to small geographic area and Environment9. The dataset leverages multi-spectral remote low housing turnover. This created some noise in the data sensing data from satellite imagery, providing coverage in making trends harder to extract. A decision was therefore square metres of trees > 3m in height, shrubs, open green made to utilise SA2, with a mean area of 6km2 instead of the space/ grassed area and total ‘greenspace’ as well as mesh more granular mesh block with areas as small as 400m2.