The effects of the new West Metro line on apartment rents

No Thumbnail Available
Journal Title
Journal ISSN
Volume Title
School of Business | Master's thesis
Date
2020
Major/Subject
Mcode
Degree programme
Economics
Language
en
Pages
46 + 3
Series
Abstract
This study examines the behavior of apartment rents when the accessibility of apartments is expected to improve due to a new public infrastructural project with case West Metro in Helsinki and Espoo. The results of the study indicate that the apartment rents are reacting to the new metro line already several years before the improvements in accessibility are expected to happen. In Finland, apartment rents are not that much studied due to poor availability of public rental data. With this study, I am addressing this lack of research studying rental data received from Realia Group. This study is focusing on the question about West Metro’s effects on apartment rents and the magnitude, geographical extent and timing of the effect. I conduct an empirical analysis using the West Metro as a quasi-experimental setting and conduct a difference-in-differences analysis. I find that the West Metro seems to have increased monthly apartment rents near new metro stations by almost 7 % already after the constructions started. Contrary to my hypothesis about increasing rents at the time when West Metro started its operations, I find that apartment rents decreased by around 4 % at that time. These findings are more descriptive than causal, as the parallel trends assumption could not be reliably indicated. The results are especially in the interest of real estate investors. West Metro phase two is currently under construction and it is expected to start its operations in 2023. Based on my results, the rents of apartments near new stations are already reacting to the metro expansion.
Description
Thesis advisor
Saarimaa, Tuukka
Leino, Lauri
Keywords
real estate market, urban economics, apartment rents, accessibility, capital region, Finland
Other note
Citation