This study deals with an estimation of the effect of public services and open spaces on housing prices in Modiin, Israel, and the extent of residents' demand for them. Two methods were used to by-pass the problem of estimating the value of these non-marketable products: 1) the Contingent Valuation Method (CVM) - a direct method; and 2) the Hedonic Price Method (HPM) - an indirect method.  In the direct method, interviewees were asked the hypothetical question of how much extra they would have been prepared to pay for their apartment at time of purchase in order to be closer to one or more of the various public services.  In the indirect method, an attempt was made to estimate the value of a city's public services and open spaces, as reflected in marketable products, namely the housing market.

The research question was investigated by means of interviews with 127 owners of apartments located at varying distances from Modiin's public services and open spaces, between April and May 2003. The public services found to be of greatest importance were: playgrounds, kindergartens, elementary schools and parks. Approximately 34% of interviewees expressed willingness to pay extra for their apartment at the time of purchase in order to live in close proximity to one or more of the public services.  This extra sum ranged from 2% to 9% of the average purchase price ($174,000).  An association was found between willingness to pay for housing in close proximity to the various services and characteristics of the interviewees. The study also found that the religious and traditional household expressed greater willingness to pay for physical proximity to synagogues and neighborhood ritual baths, as these are essential for leading a religious lifestyle and because of restricted mobility on the Sabbath. Elementary schools had a significant positive impact on apartment prices.  By contrast, daycare centers, high schools and noisy main roads had a negative impact on apartment prices.