Modelling transport and real-estate values interactions in urban systems

doi:10.1016/j.jtrangeo.2012.04.012

Journal of Transport Geography

Volume 24, September 2012, Pages 370-382

https://doi.org/10.1016/j.jtrangeo.2012.04.012 Get rights and content

Abstract

This article presents hedonic Multiple Linear Regression models (MLR), spatial autoregressive hedonic models (SAR), Spatial autoregressive hedonic in the Error term Models (SEMs) and spatial Durbin hedonic models (SDMs) to estimate house price variations in metropolitan areas as a result of changing environmental and accessibility conditions. The goodness of fit of the different models has been compared along with a series of hypotheses about the performance of the specifications considering spatial relationships between observations. The case study for such analysis was the urban area of Santander (Spain). The models which considered spatial dependence between observations offered a greater degree of fit in a scenario showing strong spatial correlation in MLR residuals. The SEM model combined with a Queen-Contiguity matrix provided a good fit to the data and at the same time presented significant parameters with theoretically coherent signs. This model estimated increases of 1.8% for each additional transit line present in the areas of housing, as well as a reduction of 1.1% in their prices for each additional minute in travelling time to the Central Business District. Closeness to the train stations, however, implied reductions in house prices.

Highlights

► Four types of hedonic models including spatial econometric models are specified. ► The objective is to estimate house price variations in metropolitan areas. ► How different transport characteristics affect the prices of real estate properties. ► The models which considered spatial dependence offer a greater fit.

Section snippets

Introduction and objectives

Classic urban economic theory proposed by Alonso, 1964, Muth, 1969 and others is based on the trade-off between accessibility and space. Locations with better access to the Central Business District (CBD) have higher land values per unit area, because certain agents are more willing to pay higher prices for them. This fact implies that investment in transport can improve accessibility to certain locations and have repercussions on property values.

Hedonic studies stand out in the empirical

Bibliographic review

Research about how transport conditions influence real estate prices can be classified into two main streams of thought. On the one hand there are the more theoretical studies initiated by von Thünen (1826) in his work on agricultural land rents. This pioneering work later served as a basis for creating a theory about the distribution of land use and rents in urban areas proposed largely by Alonso, 1964, Muth, 1969 and Mills (1972). The nucleus of the theory lies in the modelling of certain

Multiple Linear Regression (MLR) models

The data set used to estimate the hedonic models will be presented in this section. A second step will introduce the various specifications proposed for the MLR models along with a discussion about the parameters obtained. Finally, the presence of spatial autocorrelation in the residuals of the models will be evaluated, something that would violate one of the fundamental assumptions of the MLR models.

Spatial econometric models: SAR, SEM and SDM

To capture the effect of the strong spatial autocorrelation present in the residuals of the MLR models, a further series of models were estimated considering the existence of spatial dependence between observations. Both of the functional forms more commonly found in the literature, SAR and SEM, and the spatial Durbin model (SDM) were applied. The models considering spatial relationships were estimated using the specification of the MLR4 model as this gave a better fit and the measure of road

Conclusions

The work described in this article specified four types of hedonic models: multiple linear regression, spatial autoregressive, spatial autoregressive model in the error term and spatial autoregressive Durbin in order to determine the influence of transport conditions on the prices of a series of real estate properties. These models were estimated using data collected in the metropolitan area of the city of Santander and were compared to determine which of them presented the best fit and how the

Acknowledgements

This study was supported by research funding form the Spanish Ministry of Science and Innovation through the Project E 21/08-INTERLAND. The authors would also like to thank the City Council of Santander which has allowed this research to take place.

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View full text

Modelling transport and real-estate values interactions in urban systems

Abstract

Highlights

Section snippets

Introduction and objectives

Bibliographic review

Multiple Linear Regression (MLR) models

Spatial econometric models: SAR, SEM and SDM

Conclusions

Acknowledgements

Journal of Transport Geography

Journal of Transport Geography

Transport Policy

Research in Transportation Economics

Transportation Research Part A: Policy and Practice

Transport Policy

Journal of Transport Geography

Transportation Research Part A: Policy and Practice

Journal of Transport Geography

Transportation Research Part A: Policy and Practice

Location and Land Use: Toward a General Theory of Land Rent

Spatial Econometrics: Methods and Models

Thirty years of spatial econometrics

Papers in Regional Science

An evaluation of the accessibility benefits of commuter rail in eastern Massachusetts using spatial hedonic price functions

Transportation

Incorporating spatial variation in housing attribute prices: a comparison of geographically weighted regression and the spatial expansion method

Journal of Geographical Systems

Identifying the impacts of rail transit stations on residential property values

Journal of Urban Economics

Hedonic Price Indexes with Automobile Examples, the Dynamics of Automobile Demand

On the choice of functional form for hedonic price functions

The Review of Economics and Statistics

The impact of railway stations on residential and commercial property value: a meta-analysis

The Journal of Real Estate Finance and Economics

Land use–transportation modeling with urbanism: experiences and progress

The Journal of Transport and Land Use

The impact of a light rail system on the structure of house prices: a hedonic longitudinal study

Journal of Transport Economics and Policy