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If we build, will they pay?: predicting property price effects of transport innovations

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  • Gabriel M. Ahlfeldt

Abstract

In 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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File URL: http://eprints.lse.ac.uk/33595/
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Bibliographic Info

Paper provided by London School of Economics and Political Science, LSE Library in its series LSE Research Online Documents on Economics with number 33595.

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Length: 37 pages
Date of creation: Mar 2011
Date of revision:
Handle: RePEc:ehl:lserod:33595

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  1. Gabriel Ahlfeldt, 2011. "If Alonso Was Right: Modeling Accessibility And Explaining The Residential Land Gradient," Journal of Regional Science, Wiley Blackwell, vol. 51(2), pages 318-338, 05.
  2. Dean H. Gatzlaff & Marc T. Smith, 1993. "The Impact of the Miami Metrorail on the Value of Residences near Station Locations," Land Economics, University of Wisconsin Press, vol. 69(1), pages 54-66.
  3. Steve Gibbons & Stephen Machin, 2004. "Valuing Rail Access Using Transport Innovations," CEP Discussion Papers dp0611, Centre for Economic Performance, LSE.
  4. Fujita, Masahisa & Ogawa, Hideaki, 1982. "Multiple equilibria and structural transition of non-monocentric urban configurations," Regional Science and Urban Economics, Elsevier, vol. 12(2), pages 161-196, May.
  5. Liv Osland & Inge Thorsen, 2008. "Effects on housing prices of urban attraction and labor-market accessibility," Environment and Planning A, Pion Ltd, London, vol. 40(10), pages 2490-2509, October.
  6. Nicolai Wendland, 2011. "How Polycentric is a Monocentric City? The Role of Agglomeration Economies," ERSA conference papers ersa11p218, European Regional Science Association.
  7. Ahlfeldt, Gabriel M. & Feddersen, Arne, 2010. "From Periphery to Core: Economic Adjustments to High Speed Rail," MPRA Paper 25106, University Library of Munich, Germany.
  8. R Cervero & T Rood & B Appleyard, 1999. "Tracking accessibility: employment and housing opportunities in the San Francisco Bay Area," Environment and Planning A, Pion Ltd, London, vol. 31(7), pages 1259-1278, July.
  9. McDonald, John F. & Osuji, Clifford I., 1995. "The effect of anticipated transportation improvement on residential land values," Regional Science and Urban Economics, Elsevier, vol. 25(3), pages 261-278, June.
  10. Ahlfeldt, Gabriel M., 2009. "The train has left the station: Do markets value intra-city access to inter-city rail connections?," MPRA Paper 13900, University Library of Munich, Germany.
  11. Ahlfeldt, Gabriel M. & Wendland, Nicolai, 2009. "Looming stations: Valuing transport innovations in historical context," Economics Letters, Elsevier, vol. 105(1), pages 97-99, October.
  12. Ghebreegziabiher Debrezion & Eric Pels & Piet Rietveld, 2004. "The Impact of Railway Stations on Residential and Commercial Property Value: a Meta Analysis," Tinbergen Institute Discussion Papers 04-023/3, Tinbergen Institute.
  13. Baum-Snow, Nathaniel & Kahn, Matthew E., 2000. "The effects of new public projects to expand urban rail transit," Journal of Public Economics, Elsevier, vol. 77(2), pages 241-263, August.
  14. Rosen, Sherwin, 1974. "Hedonic Prices and Implicit Markets: Product Differentiation in Pure Competition," Journal of Political Economy, University of Chicago Press, vol. 82(1), pages 34-55, Jan.-Feb..
  15. Bowes, David R. & Ihlanfeldt, Keith R., 2001. "Identifying the Impacts of Rail Transit Stations on Residential Property Values," Journal of Urban Economics, Elsevier, vol. 50(1), pages 1-25, July.
  16. Dewees, D. N., 1976. "The effect of a subway on residential property values in Toronto," Journal of Urban Economics, Elsevier, vol. 3(4), pages 357-369, October.
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Cited by:
  1. Steve Gibbons & Henry G. Overman, 2010. "Mostly pointless spatial econometrics?," LSE Research Online Documents on Economics 33559, London School of Economics and Political Science, LSE Library.
  2. Rosa Sanchis-Guarner, 2012. "Driving Up Wages: The Effects of Road Construction in Great Britain," SERC Discussion Papers 0120, Spatial Economics Research Centre, LSE.
  3. Wenjie Wu, 2012. "Does Public Investment Spur the Land Market?: Evidence from Transport Improvement in Beijing," SERC Discussion Papers 0116, Spatial Economics Research Centre, LSE.
  4. Gabriel M. Ahfeldt, 2013. "Urbanity," SERC Discussion Papers 0136, Spatial Economics Research Centre, LSE.

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