Property prices, tax and expenditure levels and local fiscal performance

Abstract

Where adjacent local governments provide different combinations of local expenditure and tax levels, net differentials in the market value of these fiscal baskets will be capitalized into property values. Given sufficient data, hedonic price estimation can attempt to estimate the degree of capitalization. More importantly, these results can provide an insight into local fiscal performance, via residents' evaluations, both of the level of local taxes and expenditure and the way in which money is spent. This methodology is developed and applied to Greater Manchester, England, employing a database of 5828 transactions in residential properties.