Effects of Transportation Accessibility on Residential Property Values

Abstract

The aim of this paper is to examine the relationship between the availability of transportation infrastructure and services and the pattern of house prices in an urban area and to assess whether public investment in transportation can modify residential property values. This study was developed for the Lisbon, Portugal, metropolitan area (LMA) as part of a broader study that intends to develop new value-capture financing schemes for public transportation in the LMA. The paper focuses on three central municipalities in Portugal (Amadora, Lisbon, and Odivelas), where these effects could be more easily measured because of the existence of a significant variability of public transportation services. The paper tries to determine, with different spatial hedonic pricing models, the extent to which access to transportation infrastructure currently is capitalized into house prices and isolates the influence of three different transportation infrastructures: metro, rail, and road. The results suggest that the proximity to one or two metro lines leads to significant property value changes. Results further indicate that the classic hedonic price model (ordinary least-squares estimation) leads to similar coefficient values of the local accessibility dummy variables compared with the spatial lag model and thus provides a steady basis to forecast the property value changes derived from transportation investment for the study area in the absence of a significant property value database.

The effects of highway development on housing prices

“…The effects of transportation development on housing prices, in particular in relation to accessibility, have been addressed extensively in previous literature, predominantly using estimations of hedonic models (Armstrong and Rodríguez 2006;Cheshire and Sheppard 1995;Coulson and Engle 1987;Franklin and Waddell 2003;Henneberry 1998;Iacono and Levinson 2011;Martínez and Viegas 2009). Whereas most of these studies focus exclusively on the positive effects of improved accessibility on housing prices, other studies emphasize that both positive and negative externalities may result from highway development, and these may affect residential preferences (Debrezion et al 2007;Iacono and Levinson 2011;Martínez and Viegas 2009;Tillema et al 2012).…”

“…Whereas most of these studies focus exclusively on the positive effects of improved accessibility on housing prices, other studies emphasize that both positive and negative externalities may result from highway development, and these may affect residential preferences (Debrezion et al 2007;Iacono and Levinson 2011;Martínez and Viegas 2009;Tillema et al 2012). Moreover, depending on the exposure levels to different externalities, house prices in different geographic areas may change differently due to the effects caused by the new transportation infrastructure development (Smersh and Smith 2000).…”

Modelling transport and real-estate values interactions in urban systems

“…The properties located close to the lines also showed significant, but negative, changes in value. Martínez and Viegas (2009) examined the relationship between the availability of transport infrastructure and property values in Lisbon, Portugal in order to establish value capture schemes to introduce new public transport services. The authors used a MLR model and a SAR model to demonstrate the existence of spatial autocorrelation between observations.…”

Commercial property values in a border metropolitan economy

“…Hedonic studies have been widely used to analyze the impact of transit on property values (Rosen 1974). Prior empirical evidence indicates that the magnitude of the impacts on property values vary over space (Martinez and Viegas 2009;Anselin and Lozano-Gracia 2008;Lozano-Gracia and Anselin 2012). Tests for spatial autocorrelation and heterogeneity are used to assess spillover effects and dependence among close parcels.…”