The Raide-Jokeri price effect - Analyzing variation in private property prices in Helsinki and Espoo before construction and beyond

Abstract

Investments in public transportation infrastructure can significantly influence local property values. This study examines the impact of the Raide-Jokeri light rail line on housing prices in Helsinki and Espoo, Finland. We extend prior research by including all the phases of the project, planning, construction, and operational, a timeline which has not been examined earlier in the context of Raide-Jokeri. Using a hedonic difference-in-differences framework and extensive real estate transaction data from the Central Federation of Finnish Real Estate Agencies, the main focus of the study is apartment price dynamics within 800 meters from the Raide-Jokeri stops.

Our results suggest a 1.5% price premium for properties in this baseline treatment area post the 2016 intervention, marked by increased public awareness. When controlling for the distinct project phases, the construction phase exhibits a statistically significant, positive effect, which suggests market confidence strengthens as infrastructure projects progress tangibly. This study contributes to the existing literature investigating the various ways public infrastructure investments can affect the appreciation of properties, and how the capitalization timing matters.