Why being close to a cycle network can boost house prices

In the Danish capital Copenhagen, cycling is more than just a mode of transport; it’s a cornerstone of urban life. Residents cycle an average of 1.4km daily, with four in ten using bikes to commute to work and a third relying on cycling to reach leisure facilities or shopping.

As Copenhagen is demonstrating, this is made possible by well-planned infrastructure that fosters interconnected communities, reduces pollution and promotes wellbeing.

Cycling infrastructure in the UK is far less developed, making biking less appealing and in some cases unsafe. Critics of cycling investments argue that they might not yield substantial returns compared to other modes of transport (including public transport) that have a broader reach and potentially greater benefits.

Issues that might keep people off bikes include weather, safety fears or simply not knowing how to cycle. On top of this, cyclists are exposed to vehicle pollution.

These concerns present a dilemma – cycling infrastructure remains under-developed due to low usage, which persists because of poor infrastructure. The Danish example shows that a well-developed network (initiated in the 1970s) can break this link, making cycling a safe, accessible, and essential part of urban life. It’s what’s known as a “network effect” – where the value of a system grows as more people use it, creating a positive feedback loop.

In July 2020, then-prime minister Boris Johnson announced a “cycling and walking revolution” as part of the government’s efforts to encourage more people to cycle or walk for commutes and short journeys to help achieve the net zero 2050 targets.

Some £2 billion was promised for dedicated cycle lanes, bike storage and walking infrastructure. Sadly though, little visible government action has taken place and is small in comparison to the government investment in motor infrastructure of £5 billion per year on average. In 2023, the government, led by Rishi Sunak, accused political rivals of being “anti-motorist” and halved previous cycling and walking budget commitments.

Our recent research shows that bicycle networks are already potentially offering more than we realise. For example, across Greater Manchester in the north-west of England, homes that are closer to cycling amenities are worth more. Our findings suggest an unmet demand for cycling infrastructure – one that property developers and policymakers are not yet aware of.

Our study used hedonic pricing (which examines the factors that influence prices) of property market transactions and showed that house buyers are willing to pay more to live in areas that are closer to bicycle networks. It draws on a large dataset of around 253,000 property sales in the area, over nine years, and accounts for a wide range of home and community characteristics (things like floor area, school achievements and crime levels).

Remarkably, we found that reducing the distance to the nearest bicycle network by one kilometre is linked to a 2.85% increase in property values in Greater Manchester and an even larger increase in the central borough of Manchester.

This is sizeable – for instance, a property worth £163,000 in Greater Manchester (in 2019) would be worth an additional £4,640 if it were located 1 kilometre closer to a bike network. This increase is equivalent to approximately £312 per year, based on an annuity calculation with a 3% interest rate over 20 years.

For comparison, commuters travelling similar distances spend more than £900 annually on fuel and parking, or more than £500 on bus fares. These figures suggest that cycling infrastructure potentially has value to residents as an accessible and cost-effective transport option.

We used a range of methods and data subsets to ensure the results were accurate and robust. These suggest that households might have already priced in some of the amenity benefits of cycling.

Yet interestingly, property developers do not appear to have capitalised on this. There is a potential benefit to integrating cycling infrastructure at the initial stages of their plans.

Who should pay?

Our findings offer planners a powerful tool to prioritise new cycling route investments. Take Manchester City Council’s £8.9 million project for the Manchester Victoria Northern Eastern Gateway – a dedicated off-road cycling route. Our approach suggests it might boost property values in nearby neighbourhoods by £16.6 million. This would deliver a striking benefit-to-cost ratio of 1.9.

However, ranking investments solely by their benefit-to-cost ratio overlooks fairness in funding. Those who benefit the most from these projects may not shoulder the majority of the costs proportionately.

For example, new cycling routes are often easier to construct in the leafier and more affluent areas with more available space. Yet the funding comes from the entire community, including lower-income residents who are less likely use or benefit from these routes.

Unlike much of Europe, local authorities in the UK have very limited powers to raise taxes. UK council tax bandings are based on valuations dating back to 1991 – a regressive tax that benefits expensive homes. These bands rarely change.

One (possibly contentious) suggestion would be to link council tax directly with up-to-date property values. Countries like Denmark, the Netherlands and Sweden do this, updating their council tax regularly.

This type of data on property values for the UK is publicly available online. It was the basis for our study, and would resemble information that is already provided by websites like Zoopla and Rightmove.

Councils could use this approach to self-fund investments and maintenance, unlocking opportunities for regeneration and community development.

But as funding currently relies ultimately on central government, it is likely that local assets like bicycle networks will continue to be underfunded – a missed opportunity for health, happiness and economic development.

The authors do not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and have disclosed no relevant affiliations beyond their academic appointment.