# RECORD 3bc07102108772a3252ac84ff32747d85447e553
# TITLE: The Impact of Neighbourhood Churches on House Prices
# YEAR: 2011.0  VENUE: nan  DOI: 10.5539/jsd.v4n1p246
# AUTHORS: G. Babawale; Y. Adewunmi
# PAGES: 8  CANDIDATE TABLE PAGES (1-based): []
# ABSTRACT: This study extends literature that empirically investigates the impact of neighborhood churches on residential property values with particular reference to selected areas in Lagos metropolis. The hypothesis that proximity to a church has no effect (positive or negative) on house prices is tested with a standard hedonic pricing model using a sample of 450 rented apartments (flats) across the study areas. The results followed the more common belief that neighborhood churches, particularly the large ones, impact negatively on the values of nearby residential properties. It further revealed that where more powerful positive externalities exist in close proximity, the negative effects of churches, even the large ones, on residential property values can be neutralized or even overshadowed. Among others, the results of the study is expected to bring to light the social and economic implications of churches located within residential neighborhoods in the study area and thereby assist urban planners, the courts and real estate valuers in resolving the debate on the nuisance versus amenity effects of neighborhood churches.


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www.ccsenet.org/jsd                Journal of Sustainable Development                Vol. 4, No. 1; February 2011 
                                                          ISSN 1913-9063   E-ISSN 1913-9071 
246
The Impact of Neighbourhood Churches on House Prices 
Gabriel Kayode Babawale, PhD. 
Department of Estate Management, University of Lagos, Nigeria 
Tel: 234-80-2316-6473   E-mail: gkbabs@yahoo.co.uk 
 
Yewande Adewunmi, M.Sc. 
Department of Estate Management, University of Lagos, Nigeria 
E-mail: yewande_adewunmi@yahoo.com 
Abstract 
This study extends literature that empirically investigates the impact of neighborhood churches on residential 
property values with particular reference to selected areas in Lagos metropolis. The hypothesis that proximity to a 
church has no effect (positive or negative) on house prices is tested with a standard hedonic pricing model using a 
sample of 450 rented apartments (flats) across the study areas. The results followed the more common belief that 
neighborhood churches, particularly the large ones, impact negatively on the values of nearby residential 
properties. It further revealed that where more powerful positive externalities exist in close proximity, the negative 
effects of churches, even the large ones, on residential property values can be neutralized or even overshadowed. 
Among others, the results of the study is expected to bring to light the social and economic implications of 
churches located within residential neighborhoods in the study area and thereby assist urban planners, the courts 
and real estate valuers in resolving the debate on the nuisance versus amenity effects of neighborhood churches. 
Keywords: Neighbourhood churches, Externalities, House prices, Hedonic model, Nigeria 
1. Background to the Study 
There is a growing recognition that property development, use and management should be evaluated against 
criteria that embody sustainability measures. That is, genuine sustainability evaluations should balance social, 
cultural and economic performance measures with environmental protection (Body, 2005). In this regard, location 
of churches within residential neighborhoods has been an issue of concern and controversy in several societies. 
The question remains whether the externalities exhibited by churches are positive (amenities) or negative 
(nuisance or disamenities). Existing empirical studies are inconclusive and anecdotal evidences are mixed. 
The notion of “externalities” is a useful concept developed in welfare economics. In real estate parlance, the notion 
of externalities states that external factors to a property can have either positive or negative effects on its value 
(Appraisal Institute, 2008; Do et al., 1994). Because of its physical immobility, real estate tends to be affected by 
externalities more strongly than most other economic goods, services, or commodities. Ascertaining the effects of 
externalities on property values provide a very strong test of the nuisance versus amenities effects. If an externality 
is truly a nuisance, then values of properties within close range will be adversely affected in proportion to the 
distance from it. If on the other hand an externality is an amenity, then property value will increase the closer a 
property is located to it.  
Example of externalities that are associated with negative effects on values of residential properties in close 
proximity are landfill (Arimah & Adinnu, 1995); brownfield (Kaufman & Cloutier, 2006) contaminated properties 
(Kohlashe, 1991; Kinnard & Geckler, 1991); air pollution (Hamilton & Biggs, 1993; Komarova, 2009); industrial 
sites (Vor & Groot, 2009); oil and natural gas facilities (Chan & McMillian, 2004); and nuclear plant and iron and 
steel plant (Bilbao-Terol, 2009). On the other hand, land uses that constitute positive externalities include water 
view (Seiler et al., 2001; Paterson & Boyle, 2002; Bourassa et al., 2004); open spaces, parks and greenbelt 
(Bolitzer & Netusil, 2000; Asabere & Huffman, 2007); golf course (Nichollis & Crompton, 2007); and 
neighbourhood schools (Ketkar, 1992; Zahirovic-Herbert, 2007). 
At present, there is paucity of studies on the effect of neighborhood churches on the values of nearby residential 
properties. The few existing studies revealed varied magnitude and direction of impact: ranging from negative, to 
insignificant, and to positive impact (Do et al., 1994; Thomas et al., 1996). In the developed nations, the paucity of 
studies could be attributed to effective planning (zoning regulation) that has curtailed indiscriminate location of 
religious premises. For example, the US has the Religious Land Use and Institutionalized Persons Act (RLUIPA), 
a federal law that profoundly makes churches to adhere to zoning regulations. Thus, Clowney (2007) observed that 
the Zoning Boards have so far successfully pressured religious institutions to limit their physical presence in