What's so special about character?

Special Character Areas (SCAs) in Auckland, New Zealand, are areas with distinctive aesthetic, physical and visual qualities. Preservation policies entail controls on the design and appearance of new buildings, and on demolition, additions and alterations to existing buildings. To promote densification of the city, the Auckland Unitary Plan (AUP) removed SCA preservation rules in certain areas. This article assesses the trade-off between SCA preservation and housing development. We employ hedonic prices models to about 85,000 sale transactions between 2012 and 2016 and find that in 2012, the SCA price premium was 11.4% whereas the premium on upzoned properties (those with increased development allowances under the AUP) was zero. Over time, the SCA premium decreases, and by 2016 it was down to about 4.3%. At the same time, upzoning premiums increased to about 5% in 2016. These results reveal a demand shift from the protections of SCA towards flexibility on the development options of land.