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Anticipatory Effects of Rail Upgrades: Auckland's Western Line

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  • Arthur Grimes

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  • Chris Young

Abstract

We examine effects of urban passenger rail upgrades to Auckland’s Western Line, including double tracking, station development, and related urban renewal projects. The results are used to assess anticipated net benefits of the developments. The rail-related upgrades are expected to be completed in late 2010, but have been well publicised and so should already be factored into people’s location and pricing decisions. Our analysis compares developments near Western Line stations with developments elsewhere in Auckland, thus controlling for wider regional and macroeconomic impacts. As well as describing developments, we estimate the impact on property values of station proximity. Changes in property values are used to identify benefits due to the upgrades since prospective property buyers bid up the price of a property to include the net benefits; otherwise they would be outbid by another prospective buyer. “Net benefits” include gross benefits less direct additional property-tax costs due to the project but do not include costs borne elsewhere (though these can be accounted for separately). We utilise actual property sale prices using a repeat sales methodology to measure price appreciation. Specifically, we examine whether price appreciation is affected by proximity to Western Line stations, allowing for different effects at each station. Our main focus is on residential values but we refer also to commercial and industrial applications.

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Paper provided by European Regional Science Association in its series ERSA conference papers with number ersa10p123.

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Date of creation: Sep 2011
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Handle: RePEc:wiw:wiwrsa:ersa10p123

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  1. Rappaport, Jordan & Kahn, Matthew E. & Glaeser, Edward, 2008. "Why Do The Poor Live In Cities? The Role of Public Transportation," Scholarly Articles 2958224, Harvard University Department of Economics.
  2. Wang, Ferdinand T. & Zorn, Peter M., 1997. "Estimating House Price Growth with Repeat Sales Data: What's the Aim of the Game?," Journal of Housing Economics, Elsevier, Elsevier, vol. 6(2), pages 93-118, June.
  3. Baldwin, Richard E., 2001. "Core-periphery model with forward-looking expectations," Regional Science and Urban Economics, Elsevier, Elsevier, vol. 31(1), pages 21-49, February.
  4. Edward L. Glaeser & Matthew E. Kahn & Jordan Rappaport, 2000. "Why Do The Poor Live In Cities?," Harvard Institute of Economic Research Working Papers, Harvard - Institute of Economic Research 1891, Harvard - Institute of Economic Research.
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  8. Andrew F. Haughwout, 2000. "Public infrastructure investments, productivity and welfare in fixed geographic areas," Staff Reports, Federal Reserve Bank of New York 104, Federal Reserve Bank of New York.
  9. Steven C. Bourassa & Martin Hoesli & Jian Sun, 2004. "A Simple Alternative House Price Index Method," FAME Research Paper Series, International Center for Financial Asset Management and Engineering rp119, International Center for Financial Asset Management and Engineering.
  10. Winston, Clifford & Maheshri, Vikram, 2007. "On the social desirability of urban rail transit systems," Journal of Urban Economics, Elsevier, vol. 62(2), pages 362-382, September.
  11. Arthur Grimes & Yun Liang, 2007. "Spatial Determinants of Land Prices in Auckland:Does the Metropolitan Urban Limit Have an Effect?," Working Papers, Motu Economic and Public Policy Research 07_09, Motu Economic and Public Policy Research.
  12. Roback, Jennifer, 1982. "Wages, Rents, and the Quality of Life," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 90(6), pages 1257-78, December.
  13. 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.
  14. Morito Tsutsumi & Hajime Seya, 2008. "Measuring the impact of large-scale transportation projects on land price using spatial statistical models," Papers in Regional Science, Wiley Blackwell, Wiley Blackwell, vol. 87(3), pages 385-401, 08.
  15. Daniel P. McMillen & John McDonald, 2004. "Reaction of House Prices to a New Rapid Transit Line: Chicago's Midway Line, 1983-1999," Real Estate Economics, American Real Estate and Urban Economics Association, American Real Estate and Urban Economics Association, vol. 32(3), pages 463-486, 09.
  16. Matthew E. Kahn, 2007. "Gentrification Trends in New Transit-Oriented Communities: Evidence from 14 Cities That Expanded and Built Rail Transit Systems," Real Estate Economics, American Real Estate and Urban Economics Association, American Real Estate and Urban Economics Association, vol. 35(2), pages 155-182, 06.
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Cited by:
  1. Arthur Grimes & Chris Young, 2010. "A Simple Repeat Sales House Price Index: Comparative Properties Under Alternative Data Generation Processes," Working Papers, Motu Economic and Public Policy Research 10_10, Motu Economic and Public Policy Research.

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