Supermarkets (sometimes) raise property values!


Living near a Waitrose ‘puts £38k on value of your home’
Study by Lloyds Bank finds proximity to upmarket supermarket branch can signifcantly add to property’s value, but living next to an Aldi can take off almost £6,000.

Prices of homes near a national supermarket store such as Waitrose, Sainsbury’s, Tesco, Marks and Spencer or the Co-operative are typically more than £15,000 higher, a report has found.
Lloyds Bank compared the cost of homes in postal districts that have a national supermarket with property prices in the surrounding areas of towns, using Land Registry house price figures covering England and Wales.
It found that on average, house prices in areas which have a supermarket in a town are around seven per cent – or £15,331 – higher than areas within the same town that do not have one.

http://www.telegraph.co.uk/news/shopping-and-consumer-news/11512665/Living-near-a-Waitrose-puts-38k-on-value-of-your-home.html

Now this raises an important question. Proponents of a Land Value Tax argue that if property values rise, a proportion of the increase in value should be returned to the community on the grounds that the community has enabled the increase in value to occur.

But is it the community (unless we mean shoppers?) or the supermarket? Should homeowners pay a tax to the supermarket for raising the value of their property? Now that would be daft!

[NB taking a proportion of the increase in value through tax is appropriate where the wider community has invested in such a way as to enable a landowner to develop land and gain thereby as the value of the land has risen. A good example would be if the state/community invested in a road which then enabled land to be developed].

Advertisements

2 comments on “Supermarkets (sometimes) raise property values!

  1. benjiiiiiii says:

    Ultimately, it doesn’t matter one jot what makes one location more productive/valuable than another.

    As, Land was not created by human effort, anyone who wants to claim exclusive use of it should pay compensation to those excluded. Not the previous owner or a landlord, as they didn’t make Planet Earth. LVT is compensation paid at the market rate for the negative externality that burden causes.

    The term “community” regarding land values is rather unhelpful, what is actually meant is agglomeration economy.

    If Waitrose had built a new store in Outer Mongolia or the Antarctic it would not have raised land values there at all.

    So, what happens when land values rise or fall in the UK?

    Only Capital/Supply is created. Aggregate demand for land is merely shifted. If Land, like capital, was reproducible it would be worthless.

    It is the scaling effect of agglomeration ie bigger markets/networks that gives rise to demand.

    What we all seek to do is tap into the productive surplus this effect has. Just like tapping into an oil reserve under the ground.

    This surplus is higher at the centre of the network hub i.e Cities. The bigger/denser the population the bigger effect.

    Which is why we see the highest demand/location values in the middle of urban areas.

    Without analysing it too much, people call it community/commonly created value.

  2. cosadone says:

    With respect, if a well paid individual in the financial sector decides they like the location of a property in Cornwall and wants to pay lots of money for it, then that ‘demand’ is not arising from the community and has nothing to do with agglomeration effects! Also you refer to people excluded being paid compensation but this is somewhat pointless as the end result that those with other assets and income would be able to afford to exclude others. You cannot divorce income from the equation.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s