Strong, weak, or reversed: The spatial heterogeneities in the effects of squatter settlements on house prices

Abstract

The proliferation of squatter settlements in many cities is an example of increasing social inequality and associated residential segregation. Squatter settlements are known to reduce house prices nearby, but we find that their effects are far from homogeneous in the city. To identify such varying effects, we used geographically weighted regression (GWR), which allows for the regression coefficients to vary over space. In the City of Buenos Aires, we found that the negative effect of the proximity to the squatter settlements is stronger in higher income neighborhoods while that in the lower income neighborhoods were weak or insignificant. We also found that a squatter settlement in a strategic area can be an opportunity to redevelop into a highly productive area, thereby raising the house prices nearby through speculation. These findings suggest that policies to improve a squatter settlement are not only in the interest of its residents, also but of the high-income households in the city. This improvement would not lead to a substantial rise in house prices in low-income neighborhoods that would otherwise worsen the housing affordability.