Property Australia

What value does the property market put on green space?

Karen Jamal Karen Jamal April 27, 2021

CoreLogic has found a positive correlation between property values and green space in Greater Sydney – but with some clear caveats. Find out what green means for the market. 

 

Three key takeways 

  • CoreLogic has found a “positive but weak” correlation between private and public green areas and 2019 sale prices in Sydney for both houses and units, with green space one of many variables driving price 
  • But in more densely populated areas, like Sydney’s Eastern suburbs, a far stronger relationship between green space and price exists 
  • CoreLogic suggests Australians are less likely to pay a premium for green space because we have more of it freely available – with Sydney boasting 46% public green space, compared with 33% in London and just 13% in Amsterdam. 

 

“Previous research, much of it international, has highlighted the health benefits of living close to green space, be it private or public, as well as the housing value premium associated with having access to green space,” say CoreLogic research director, Tim Lawless. 

“There is also the all-important environmental benefits green space provides to our communities, country and climate.” 

One meta-analysis of Europe, North America and Australasia found that urban nature, such as parks and forests, has a positive impact on house values – in some cases driving an increase in property values of up to 20 per cent.  

One of the only Australian studies, Valuing Victoria’s Parks undertaken in 2013, showed a 5-7 per cent increase in home value for properties immediately adjacent to parks in Melbourne, with similar results also found in Perth. 

CoreLogic looked at Sydney’s housing market, finding a “positive correlation” between housing values and green space in some areas, Lawless explains. 

“However, the correlation across the broad Sydney region was not strong, implying a lot of other factors are involved in determining the value of a residential property.” 

CoreLogic’s study suggests the generally low correlation between green space and housing prices may be due to Sydney’s larger volume of green space than many European cities cited in international research. Sydney boasts 46 per cent public green space, compared with 33 per cent in London and just 13 per cent in Amsterdam. This suggests residents and authorities place more value on green space where it is less accessible. 

Areas with high population densities, which tend to have more multi-unit dwellings and smaller lot sizes for detached homes, also have lower private green space. “Unsurprisingly, we can see a clearer relationship between private green space and housing price premiums,” Lawless says. 

In densely populated Eastern suburbs of Sydney, there is a far stronger relationship between private green space and price, explaining 26.6 per cent of house price variation and 20.6 per cent of unit price variation, with the scarcity of private green space likely to be a contributing factor. 

“In these higher density precincts, efficient access to public green space becomes all the more important, with a statistically significant positive relationship between unit prices and proximity to green areas such as parks and reserves,” Lawless emphasises. 

CoreLogic’s research follows, Reimagining our economic powerhouses, a report launched by the Property Council and EY in March, which found green and open space was one of the “standout strategies” to lure people back to CBDs.  

COVID-19 lockdowns have given Australians a new perspective on green space for “exercise, connection and solace”, the report finds, with 86 per cent of people now valuing it in their cities – whether that’s laneways peppered with pot plants, sky parks, rooftop gardens or sustainable workplaces. 

The pandemic presents opportunities to accelerate Australia’s already world-leading investments and efforts in green building, the report argues. Australia has a growing number of examples of “urban oases”, such as Melbourne Quarter’s Sky Park – a new public green space above Collins Street – which shows how green space can be created where it never previously existed. 

Lawless says shifts in climate change strategy and domestic policy may strengthen the market’s “readiness to value ‘greenness’ as a tangible property feature”. 

“Looking forward, as our cities grow and densify, it’s likely the relationship between green space and housing values will become clearer and more widespread.” 

Download CoreLogic’s study into the relationship between house prices and green space. 

Tags: RESEARCH