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Environmental noise has become a major issue in densely urbanized areas. The impact of this externality on the quality of life is reflected by a decrease in the residents' well‐being, and subsequently a decrease in property values. A considerable number of studies have used hedonic pricing (HP) to assess the impact of noise on property markets, but few of them have considered the existence of submarkets. Theoretically, it could be expected that the marginal value of 1 dB varies according to the neighbourhood's noise exposure, the property characteristics (e.g. insulation level) and the annoyance experienced by residents. The purpose of this paper is to determine whether noise has a stationary impact on property prices.

Geographically weighted regression is used, which resolves spatial dependencies (i.e. spatial autocorrelation) and considers “soft borders” between submarkets to study the impact of noise on the value of a sample of multifamily dwellings in Barcelona.

The analysis suggests that the noise level does matter, although the noise depreciation sensitivity index (NDSI) found (0.08 per cent) is in the bottom decile of the HP studies reviewed by Navrud. However, the NDSI is not stationary throughout the city, suggesting that 1 dB has a different impact in different areas.

Noise impact seems to depend not only on the noise intensity to which dwellings are exposed but also on the nature of the noise source. This may suggest the presence of other externalities that arouse social aversion.

Air quality, noise and proximity to urban infrastructure can arguably have an important impact on the quality of life. Environmental quality (the price of good health) has become a central tenet for consumer choice in urban locales when deciding on a residential neighbourhood. Unlike the market for most tangible goods, the market for environmental quality does not yield an observable per unit price effect. As no explicit price exists for a unit of environmental quality, this paper aims to use the housing market to derive its implicit price and test whether these constituent elements of health and well-being are indeed capitalised into property prices and thus implicitly priced in the market place.

A considerable number of studies have used hedonic pricing models by incorporating spatial effects to assess the impact of air quality, noise and proximity to noise pollutants on property market pricing. This study presents a spatial analysis of air quality and noise pollution and their association with house prices, using 2,501 sale transactions for the period 2013. To assess the impact of the pollutants, three different spatial modelling approaches are used, namely, ordinary least squares using spatial dummies, a geographically weighted regression (GWR) and a spatial lag model (SLM).

The findings suggest that air quality pollutants have an adverse impact on house prices, which fluctuate across the urban area. The analysis suggests that the noise level does matter, although this varies significantly over the urban setting and varies by source.

Air quality and environmental noise pollution are important concerns for health and well-being. Noise impact seems to depend not only on the noise intensity to which dwellings are exposed but also on the nature of the noise source. This may suggest the presence of other externalities that arouse social aversion. This research presents an original study utilising advanced spatial modelling approaches. The research has value in further understanding the market impact of environmental factors and in providing findings to support local air zone management strategies, noise abatement and management strategies and is of value to the wider urban planning and public health disciplines.