The Effect of Noise Barriers on the Market Value of Adjacent Residential Properties

Benoit Julien and Paul Lanoie ()
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Paul Lanoie: IEA, HEC Montréal, http://www.hec.ca/iea/

No 02-07, Cahiers de recherche from HEC Montréal, Institut d'économie appliquée

Abstract: This paper provides the first study on the impact of noise barriers on the price of adjacent houses based on a repeat sale analysis (RSA), arguably the best methodology to address this question. Essentially, a repeat sale analysis examines the differential between the prices of houses sold before and after an event that may have affected their value. If there is a significant change of price between the two transactions, it may be attributed to the event. Of course, for that to be true, the researcher must have controlled for other changes that may have had an effect on the house price between two sales, like the evolution of the real estate market and major renovations done to the house. We collected our data in a neighbourhood of Laval, a suburb of Montreal, where an important noise barrier has been built in 1990 along a highway. We were able to obtain information on 134 houses that have been sold at least twice during the period 1980 – 2000. In addition, we were able to get data on the real estate market in the area during the whole period, as in most RSA, but also on the demographic composition of the area and on major renovations that were done in these houses throughout the time span. To our knowledge, this is the first time that information on major renovations was available for a RSA. We conclude that the noise barrier has induced an increase of 10 %, on average, of the price of adjacent houses in our sample.

Keywords: noise barriers; housing market; repeat sale analysis (search for similar items in EconPapers)
Pages: 25 pages
Date: 2002-09
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