Heritage Designation: The Effects of Designation
There are many reasons to designate a property, as described throughout this guide, but it is not unusual for property owners to express concern about the implications of designation.
Heritage BC believes more could be done pre-emptively to communicate the benefit of heritage designation and the incentives.
Some of the concerns undoubtedly can be managed with proactive communication that describes the benefits of heritage designation to the community and property owner (through an incentives package). Information should anticipate the questions and concerns of the owner and it should be readily available at all times.
Local governments should make every effort to anticipate the concerns of property owners and to place a positive light on heritage conservation.
A typical fear of property owners is the loss of property value on the real estate market. Again, this is a topic that needs to be better understood and proactively communicated.
Several studies explore the relationship of property valuation and designation and register listing. While the comparisons are challenging, the evidence indicates heritage-designated properties are more likely to increase in commercial value.
Perhaps the most compelling research comes from Robert Shipley, who wrote in Heritage Designation and Property Values: Is there an Effect?:
“Almost 3,000 properties in 24 communities were investigated, in what is believed to be the largest study of its kind ever undertaken in North America. It was found that heritage designation could not be shown to have a negative impact. In fact there appears to be a distinct and generally robust market in designated heritage properties. They generally perform well in the market with 74% doing average or better than average. The rate of sale among designated properties is as good or better than the ambient market trends and the values of heritage properties tend to be resistant to down-turns in the general market.” (source)
(See compensation for more information)
The rate of sale among designated properties is as good or better than the ambient market trends and the values of heritage properties tend to be resistant to down-turns in the general market.
The following information comes from one of the largest Canadian studies, which surveyed 24 Ontario communities and 3,000 properties. Some of the findings found in this report:
- Considering house prices, 74% of heritage properties performed average or better than average in the market.
- The rate or number of sales among designated properties was good or better than the comparative market.
- Values of heritage properties tend to be resistant to down-turns in the general market.
Taking a closer look, the study indicates approximately 59% of the heritage properties performed better than the average property. 15% of the heritage properties were comparable to the average price trend. And 26% performed below the average price trend. This suggests that three out of four times, a heritage property will sell at the same price or better than the average market. Looking at individual communities, we can see some performed extremely well:
- Heritage homes performed as high as 88% in Oakville and 92% in the Region of Haldimand-Norfolk
There was only one exception to this trend that was revealed in this Ontario study:
- Individually designated heritage properties in Prince Edward County under-performed by71% below average.
The author of the Ontario study also looked at the effect of a market downturn.
- 21% of the surveyed properties lost value greater than the average.
- 32% performed at the same rate as the average.
- 47% performed better than average.
That means, nearly 80% of the heritage homes held their value or did better during a repressed period. The same author produced a report in 1992 that focused on heritage homes in London, Ontario. While it is an older report, it suggests heritage real estate has held a certain strength in the market for a while. The research showed 64.4% of individual designated properties performed better than the average real estate market. Another 33.3% were consistent – or held their own – with the market. Only 2.2% performed below average real estate market. Acknowledging this is a smaller, restricted sample, this report suggests 97.8% of heritage properties did as well or better in the real estate market than non-heritage properties.