A Note on Property Values

The fear of negative impact on property values is a common source of public concern about Heritage Designation of individual properties and districts. The theoretical argument is that designation restricts what the owner can do with a property, that this limits the number of buyers willing to accept such restrictions, and that the law of supply and demand necessarily diminishes the market price. This fear, and the theory that supports it, is not borne out by research.

The most recent study, by Robert Shipley of the University of Waterloo, investigated market trends over time, for 2,707 Designated properties in 24 Ontario communities, including 5 Heritage Districts. The study found that a large majority of Designated properties, approximately 74%, performed above or at average in price-trend compared to similar but undesignated properties in their communities. Results for properties in the Heritage Districts studied were similar: though only three Districts had enough sales transactions to provide meaningful data, in two of them 50% of the price trrends were at or above the average for similar properties outside the District in their communities. In the other District 100% of the price trends were at or above the average. In addition, the prices of Designated properties showed a marked resistance to general real estate market downturns, retaining value at average or better rates in 79% of the cases, and rate-of-sale figures for Designated properties were generally higher than average, showing that Designation does not hamper sales.

Preliminary results from similar studies currently underway in Canada and the United States tend to confirm Shipley's conclusions that the impact of heritage designation on property values is positive rather than negative.