The Economics of Heritage: How Historic Buildings Shape Housing Market and Urban Development

This paper examines how the spatial distribution of historic buildings affects housing market and urban development in China. Using data on nationally designated historic sites, we find that historic designation leads to significant positive effect on housing prices within 1.5 km of protected sites, accompanied by higher local population density, consistent with a demand-side amenity channel. Cities with more centralized distributions of historical buildings exhibit steeper housing price gradients, more compact urban form, and smaller populations. We develop a theoretical model to explain how historical buildings shape housing markets and urban growth patterns. Our findings highlight the trade-off between historical preservation and urban development, underscoring the importance of coordinating preservation with land-use and housing policies. JEL: R30, R52, O18