Public perception matters: Estimating homebuyers’ willingness to pay for urban park quality

Abstract

Previous studies show that urban parks have an amenity effect, which increases the willingness of homebuyers to pay for houses located close to these parks. However, the impact of urban park quality, especially perceived quality, on willingness to pay is relatively underexamined. We estimate the natural and perceived qualities of urban parks in the downtown area of Tianjin where recently implemented urban green policies favoured the development of large urban parks. To measure perceived quality, we construct a multi-dimensional scale item and test its reliability and validity. Using spatial econometric and multi-level models, we assess if and to what extent perceived urban park quality affects the value of nearby houses and the interaction effect between urban park quality and proximity. Results show that an urban park with high natural quality may not have high perceived quality. Amongst those factors determining perceived quality, perceived quality on naturalness positively influences property value, whereas other perceived factors are unimportant in residents’ willingness to pay. Relative to natural quality, a higher perceived quality further increases the residents’ willingness to pay. Moreover, the effect of nearest (within 400 m) urban park availability is influenced by urban park quality. Our findings contribute to urban green policymaking in Tianjin where policymakers are choosing between building new urban parks and developing existing ones or allocating more funds to the development of community-level parks. Housing markets reject the former strategy yet support those policies that focus on the perceived quality of lower-level urban parks highly appreciated by urban residents.