Sign Value, Topophilia, and the Locational Component in Property Prices

Abstract

Over the last few decades a certain fragmentation of economy and society has taken place on a global scale. A related observation is that the marketplace for landed property has become more complex, involving more actors and informal networks. The consequence is a cultural and behavioural reorientation of the conceptual model of property-value formation, which traditionally is anchored in equilibrium economics. This postulate is especially relevant for the residential sector as households and their preferences, as well as external factors forcing their mobility, are factors that contribute to the formation of house prices. However, from the early 1970s there was literature that pointed to a multidimensional theoretical framework on aesthetic and other values that ‘make the place’. Using more multiple and idiosyncratic perspectives of value conceptualisation is therefore not a completely new trend, only a neglected line of research. With these potentially powerful formulations as the background, this contribution presents evidence of property-value formation from the 1990s Helsinki housing market. Using the analytic hierarchy process, quality ranks for different bundles of locational attributes were generated based on interactive data, and compared with actual market-outcome data. Both the theoretical and the empirical material compiled for this paper suggest that, to remain a valid concept, equilibrium needs to be treated at the level of market price together with stated actor choice—not just on the level of the first concept.