Location factor offers resistance to house price pressure
by Nikos Roussanoglou, ekathimerini.com, 15 October 2014

The quality of a neighborhood, which depends on factors such as proximity to squares, parks and urban woodlands, can raise the price of a residence by up to 34 percent above the average rate, according to a study by the Bank of Greece regarding the impact of green spaces on housing rates which was presented earlier this week at the RE+D Business Forum in Athens.

The research, presented by BoG Property Market Analysis economist Vassiliki Vlachostergiou, was aimed at recording how significant location is in the determination of a residence's price. Five main parameters were examined: the existing town-planning status, the quality of infrastructure (access and transport), the quality of the structured environment (common spaces, playgrounds, urban forests, parks and buildings), the quality of the natural environment (proximity to a mountain or the sea) and population density.

The survey was conducted in the northern and southern suburbs of Athens between January 2012 and February 2014, and showed that the quality of the structured environment, especially proximity to parks, urban forests, squares etc, has the greatest effect on a property's final price, raising it by up to 34 percent compared to the average rate. The second-most important factor in price determination is the quality of the natural environment, which can result in an increase of up to 12 percent on the going rate.

On the other hand, in an exception to the market's general rule, access to public transport does not push prices up by any significant degree in the capital. Buyers appreciate the surroundings of a property more than proximity to public transport. Furthermore, a one percentage point increase in the building coefficient (the percentage of built-up space in a given plot) can lead to a drop of up to 10 percent in property values due to the downgrading of the neighborhood.

The survey found that the above factors account for two-thirds (67 percent) of the formation of house prices, with the remaining 33 percent concerning the particular features of a house, quality of structure and energy efficiency.

The conference heard that those factors are not affected by the economic crisis and the real estate market. Therefore houses with a favorable environment are more resistant to pressure in times of crises than properties in other areas.