If We Build, Will They Pay? Predicting Property Price Effects of Transport Innovations
AbstractIn this study I develop a partial equilibrium approach for the prediction of property price effects of transport network extensions. It combines a gravity-type labor market accessibility indicator with a transport decision model that takes into account the urban rail network architecture, allows for mode switching and relaxes the assumption that stations represent perfect substitutes. The model is calibrated to the Greater London Area and is used to predict property price effects of the 1999 Jubilee Line and DLR extension. A considerable degree of heterogeneity is predicted both in terms of the magnitude as well as the spatial extent of price effects around new stations. A quasi-experimental property price analysis reveals that the model performs well in predicting the observed average accessibility effect. Relative transport costs associated with distinct transport modes are identified from the data by calibrating the model of observed property price adjustments.
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Bibliographic InfoPaper provided by Spatial Economics Research Centre, LSE in its series SERC Discussion Papers with number 0075.
Date of creation: Mar 2011
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Web page: http://www.spatialeconomics.ac.uk/SERC/publications/default.asp
property prices; hedonic analysis; transport innovations; gravity equation;
Find related papers by JEL classification:
- H43 - Public Economics - - Publicly Provided Goods - - - Project Evaluation; Social Discount Rate
- R40 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Transportation Economics - - - General
- R58 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Regional Government Analysis - - - Regional Development Planning and Policy
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