If we build it, will they pay? Predicting property price effects of transport innovations

Gabriel Ahlfeldt

LSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library

Abstract: In this study I apply a gravity-type labor-market accessibility model to the Greater London Area to investigate house price capitalization effects. The spatial scope of labor-market effects is found to be about 60 minutes. Doubling accessibility increases the utility of an average household by about 12%. I combine the gravity approach with a transport decision model that takes into account the urban rail network architecture, allows for mode switching, and thus accounts for the effective accessibility offered by a station, to predict the 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 effective capitalization effects, suggesting that the approach might be a viable ingredient in transport planning.

Keywords: property prices; hedonic analysis; transport innovations; gravity equation (search for similar items in EconPapers)
JEL-codes: H43 R40 R58 (search for similar items in EconPapers)
Date: 2013-08
New Economics Papers: this item is included in nep-tre and nep-ure
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Citations: View citations in EconPapers (17)

Published in Environment and Planning A, August, 2013, 45(8), pp. 1977-1994. ISSN: 0308-518X

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Related works:
Journal Article: If We Build it, Will They Pay? Predicting Property Price Effects of Transport Innovations (2013)
Working Paper: If We Build, Will They Pay? Predicting Property Price Effects of Transport Innovations (2011)
Working Paper: If we build, will they pay?: predicting property price effects of transport innovations (2011)
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