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How do crime rates affect property prices?

Melek Cigdem-Bayram () and David Prentice
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Melek Cigdem-Bayram: RMIT

No 201802, Technical papers from Infrastructure Victoria

Abstract: In this paper we take the first steps to providing parameters capturing the wider impacts of crime when performing cost benefit analysis of investments in justice infrastructure. Specifically, we provide the first set of estimates of the wider impacts of crime for metropolitan Melbourne and regional Victoria. We estimate the effects of two different types of crime on households applying a hedonic regression model to a three year dataset of house prices and characteristics, distances to local amenities and crime rates. We find while an increase in the per capita rate of crime against persons reduces property prices in regional Victoria, it has no such effect in Melbourne. And we find no significant relationship between crimes against property and property prices in either Melbourne or regional Victoria. This implies that when investing in justice infrastructure to deliver services in regional Victoria that are expected to reduce crime against persons, the impact on the broader community (as captured through effects on property prices) should be taken into account in a cost-benefit analysis.

Keywords: Crime; House Prices; Hedonic Regression; Cost-Benefit Analysis; Australia; Victoria (search for similar items in EconPapers)
JEL-codes: C21 D61 D62 R00 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-ure
Date: 2018-05-17
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