The effect of public transportation projects on housing prices

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School of Business | Bachelor's thesis
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Date

2024

Department

Taloustieteen laitos

Major/Subject

Mcode

Degree programme

Bachelor’s programme in Economics

Language

en

Pages

24

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Abstract

Public transportation developments are a key part of modern urban planning. New public transportation lines have large effects on their surrounding areas, including on housing prices. According to theory, new public transportation lines will likely lead to an increase in housing prices. There is also an anticipation ef-fect present, meaning these price increases will be visible already before the opening of the new line, for example at its announcement. This literature review studies the presence of this price effect on housing prices in the surrounding area of a new metro expansion in the years leading up to and following its opening. I look at two papers by Gupta et al. (2022) and Harjunen (2018) that examine this research question using a quasi-experimental difference-in-differences design in the cities of New York City and Helsinki respectively. I explain the theory behind the difference-in-difference model and the anticipation effect. I then discuss the research designs used in the two papers and their validity, especially focusing on the construction of the control groups and counterfactuals. I find that a positive price effect is found in both cities.

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Thesis advisor

Terviö, Marko

Keywords

Public transportation, Housing prices, Difference-in-differences, Urban economics

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https://urn.fi/URN:NBN:fi:aalto-202410276909

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[kand] Kauppakorkeakoulu / BIZ