Does environmental quality play a role in determining housing prices in a coastal community?

Abstract

Buying a house is one of the most common forms of investment worldwide. People often choose to invest in property not only for its potential financial return, but also because owning a home can contribute significantly to long-term stability and quality of life. While satisfaction with housing conditions is important for overall well-being, this is not necessarily what motivates a purchase. In addition to serving as a residence, property ownership can offer financial benefits if the owner decides to sell or rent it in the future. The first evaluation of the house (which is usually executed together with the real estate agent) is reflected in the willing-to-sell price published in the property sale ads or, as we name it here, property price perception. In this study, we investigated whether the local environmental conditions (presented by coastal seawater quality measured objectively and subjectively) affect the price perception, together with traditional factors affecting the first price evaluation (such as the house and property area and year of construction, etc.) in Raseborg, Finland. We found that prices in ads for houses and cottages listed for sale in the high-peak season were higher in places where the objective state of seawater was in better condition. These results demonstrate that owners and real estate agents consider the natural conditions in their first property evaluation and underline the potential financial reward of local nature for community members and policymakers.