THE IMPACT OF MIXED LAND USE ON RESIDENTIAL PROPERTY VALUES*

ABSTRACT Contemporary European urban planning policies aim to mix land uses in compact neighborhoods. It is presumed that mixing land uses yields socioeconomic benefits and therefore has a positive effect on housing values. In this paper, we investigate the impact of mixed land use on housing values using semiparametric estimation techniques. We demonstrate that a diverse neighborhood is positively valued by households. There are various land use types that have a positive impact on house prices, e.g., business services and leisure. Land uses that are incompatible with residential land use are, among others, manufacturing and wholesale. It appears that households are willing to pay about 2.5 percent more for a house in a mixed neighborhood. We also show that there is substantial heterogeneity in willingness to pay for mixed land use. For example, only apartment occupiers are willing to pay for an increase in diversity, whereas households living in other house types are not willing to pay for diversity.