The Effect of railway route extension on housing price

Abstract

This paper examines changes in housing values associated with route extensions of a public rail service in South Korea. The purpose of this study is to analyze the causal impacts of the second opening of Gyeongui Line (first route extension) and the opening of Gyeongui-Jungang Line (second route extension) on the apartment prices in Ilsan Newtown. This study defines the treatment and control groups depending on geographical proximity to rail stations, and tests the net impacts of the extensions using the difference-in-differences model. It collected the transaction data from 2012 to 2015 provided by the Ministry of Land, Infrastructure, and Transport in South Korea. This study finds that the first and second route extensions of the rail service have positive effects on the apartment prices that fall within 800m distance from rail stations, and higher treatment effects are found from the second extension. These findings suggest that the increase in accessibility to distant areas through railway line extensions have positive effects on the regional values in the metropolitan area.