Low crime rates can translate into higher property prices
Crime rates are important to many home buyers when considering moving into an area. The chance to raise a family safely or simply live without the fear of offence is often worth paying a premium for, and that usually affects house values in the immediate area in a positive way. However, the impact that rates of crime have on property valuations is the source of much contention between property experts. Despite the difficulty in definitively proving the link between crime and house prices, evidence published as far back as 2004 suggests the relationship is very real.
The evidence that low crime rates lead to higher property values
The Economic Journal published a report which concluded that home-buyers were prepared to pay up to 1.7 percent more for a property in a neighbourhood where crime rates were 10 percent lower than the London average. It seems that low levels of crime are fundamental factors in the property buying process, and buyers now have more crime information at their fingertips than ever before.
However, it also appears that home buyers differentiate between particular types of crime during the buying process. Crimes that leave a lasting, visual impact on a community – such as graffiti and vandalism – have a direct and substantial effect on local property prices. It would appear that aesthetic concerns are more prevalent amongst buyers than instances of violent crime. And perhaps more surprisingly, the same study found that burglaries – despite their greater financial and emotional cost – had no impact on house valuations in an area. These conclusions drawn from crime statistics between 1999 and 2001, there is no reason to believe that things have changed too much since then.
The study also suggests that houses in neighbourhoods with a selection of decent pubs and wine bars can attract property valuations 2.8 percent higher than the same properties in areas with none. Home valuations next door to – or within a few metres of a pub – were adversely affected. It seems that the threat of disorder and criminal damage may scare buyers off, so keeping a healthy distance between a home and a public house is usually good for house values.
Does more crime information permanently affect property prices?
When the Police.uk website started to communicate crime levels by street; it was thought that it would wipe thousands off property values. While this has – to a certain extent – been the case, streets and neighbourhoods with low rates of vandalism, anti-social behaviour and graffiti have enjoyed a rise in net house prices. Buyers now have access to incredibly detailed crime statistics on a street-by-street basis, and according to the Royal Institute of Chartered Surveyors, allowing people to make informed buying decisions has to be a good thing.
It may take a few years to fully understand the impact publicly available crime figures have on property values, however, as local markets will need time to adjust. In the case of school league tables, average property values in the catchment areas of high-performing schools rose by up to 20 percent in some parts of the country. But the housing market has a tendency to right itself after such a shock to the system. And in the same way, as school performances can change over time, so can crime rates.
Although crime rates are relatively small on a buyer’s list of priorities, this freely available crime information is certain to have an effect on property prices in some areas. Buyers will still be more concerned with the number of bedrooms, local schools and the general condition of a home than local crime stats. However, with the information available to anyone who wants to look for it, living in an area with low rates of crime is almost certain to have a positive – if limited – effect on the market price of your home.
To protect the value of your home, keep an eye on ‘house prices in my street’. There are many useful websites to keep an eye on property price predictions and trends which may help when choosing the time to sell your house. There is a broad range of factors which affect property prices, taking into account the positives and negatives could save you money.