Cities and the Urban Land Premium

Cities and the Urban Land Premium

Henri L.F. de Groot, Gerard Marlet, Coen Teulings and Wouter Vermeulen

After a long period of suburbanisation, cities have been in vogue again since the 1980s. But why are people prepared to spend far more money on a small house in the city than on a large house in the countryside – and why doesn't this apply to all cities? This book shows that the appeal of the city in the 21st century is not only determined by the production side of the economy, but also by the consumption side: its array of shops, cultural activities and, for example, an historic city centre. All these factors not only translate into land prices that are worlds apart but, in terms of production, into different wages for urban and rural citizens. This book maps out these differences.

Chapter 5: The consumer city

Henri L.F. de Groot, Gerard Marlet, Coen Teulings and Wouter Vermeulen

Subjects: economics and finance, urban economics, urban and regional studies, cities, urban economics


This city is far too beautiful a woman. De Dijk, 1988. The land underneath the most expensive residential spot in the city centre is more than 200 times as expensive as its cheapest counterpart in the rural areas of the province of Groningen. How is that possible? The previous chapter showed that in the city more money can be earned than outside it. That wage surplus explains a part of the land value surplus, but not all. Apart from the wage that can be earned, the variety of jobs on offer is also important to the value of residential locations. In determining the price that a housing consumer is prepared to pay, the wage level and the (future) career opportunities also carry weight. Particularly since the number of double-income couples is growing, more and more people strategically opt for a place to live where career opportunities are optimal for both partners.

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