Does noise have a stationary impact on residential values?

Abstract

Purpose Environmental noise has become a major issue in densely urbanized areas. The impact of this externality on the quality of life is reflected by a decrease in the residents' well‐being, and subsequently a decrease in property values. A considerable number of studies have used hedonic pricing (HP) to assess the impact of noise on property markets, but few of them have considered the existence of submarkets. Theoretically, it could be expected that the marginal value of 1 dB varies according to the neighbourhood's noise exposure, the property characteristics (e.g. insulation level) and the annoyance experienced by residents. The purpose of this paper is to determine whether noise has a stationary impact on property prices. Design/methodology/approach Geographically weighted regression is used, which resolves spatial dependencies (i.e. spatial autocorrelation) and considers “soft borders” between submarkets to study the impact of noise on the value of a sample of multifamily dwellings in Barcelona. Findings The analysis suggests that the noise level does matter, although the noise depreciation sensitivity index (NDSI) found (0.08 per cent) is in the bottom decile of the HP studies reviewed by Navrud. However, the NDSI is not stationary throughout the city, suggesting that 1 dB has a different impact in different areas. Originality/value Noise impact seems to depend not only on the noise intensity to which dwellings are exposed but also on the nature of the noise source. This may suggest the presence of other externalities that arouse social aversion.