Authors: Yangfanqi Liu, Helen X. H. Bao
Year: 2026
Status: Under Review
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Abstract
Spillover effects have long been a central issue in housing and urban studies, yet few studies have explored positive spillovers and their underlying mechanisms at the micro-neighbourhood level. This study examines the extent to which four types of physical alterations to a house (rear extension, dormer extension, front extension, and front renovation) influence the value of neighbouring properties in Cambridge, UK. Staggered difference-in-differences (DID) models are employed to estimate the temporal duration and spatial extent of these spillover effects. Different types of alterations are identified using local planning application data, and property transaction data from Rightmove between 2006 and 2024 are used to capture changes in property prices. The results show that rear extensions and dormer extensions significantly increase neighbouring property values by 4.39% and 4.64%, respectively, in the third year post-alteration, whereas front extensions and front renovations have no statistically significant impact. Positive effects are observed among immediate neighbours (4.18% and 3.45%) and second-tier neighbours (3.38% and 3.10%) following rear extensions and dormer extensions. These findings support the hypothesis that an approved extension to one house increases the likelihood that similar extensions to neighbouring properties will be approved by the local planning authority, thereby enhancing their appreciation potential and their property values. In contrast, renovations to a property’s frontage, which improve the neighbourhood physical environment, have limited spillover effects.