Influences of Social Services of General Interest on the Market Value of Residential Real Estate

Abstract

Many different factors influence the market value of real estate. These include the general location as well as the areas of the land and the living space, the type of building and the year of construction, etc. In Germany, publicly derived standard land values, property interest rates or marked adjustment factor (in the cost approach) describe the structural differences in location. Investigations on the relationship to socio-economic indicators and facilities of social services of general interests (e.g. family doctors, primary school, supermarkets), especially regarding their accessibility, do not exist. But an indirect relationship does exist. The standard land values and other required data also reflects the supply situation close to the place of residence. This research gap will be closed by examining corresponding data for their value relevance. In Germany, a major problem is the availability and associated with this the investigability of relevant data. The Atlas of Services of General Interest of the Federal State of Lower Saxony (DVAN) will address this problem in the future. The DVAN is under development in a research project of the authors. For the first time, various map layers on infrastructure facilities in the areas of education (kindergartens, schools, libraries), health care (family doctors, ophthalmologists, psychotherapists, hospitals, etc.) and retail will be available in an internal administrative web application, which can be combined with population and accessibility data for the means of transport pedestrians, bicycles, pedelecs, cars and public transport. Further topics and different analysis methods for describing the supply situation will be integrated in the future. For the valuation, it is important that the neighbourhood of a residential real estate ensures at least basic services. The following applies: A high quality of life implies good accessibility to public social services. The better the supply situation, the higher the quality. Also, the demand on the location is higher. Therefore, a value relevance for the access to social services of general interest can be assumed. For the presented investigation, the processed data and other generated variables of the DVAN, as well as the purchase cases of the last few years from the purchase price collection, were analysed in regard of their market value relevance. After the theoretical consideration of possible value relevance, the modelling is carried out in factor analysis and then using structural equation models. We would like to present the interim results and discuss the research question: Does a parameter 'social service of general interest close to home' improve the understanding of the composition of the market value of residential real estate? In the future, the results are compared with the established hedonic models and validated through expert interviews.