The Road to Higher Prices: Will Improved Road Standards Lead to Higher Housing Prices?

Abstract

We study the impact of improved road standards on housing prices in a region of Southern Norway, where towns are located along the coast, like pearls on a string, with sparsely populated areas between the towns. In this region towns have since long been linked together by a road, but in 2009 a new highway, roughly parallel to the old road, was opened. The new highway runs Eastwards from the main town in the region and reduced one-way commutes to the main town by 10-15 min. We examine how this change in transportation infrastructure has affected housing prices, using difference-indifference regressions to identify the impact of the new highway. Three smaller towns located East of the main town constitute the treatment region, while four towns and communities West of the main town form the control region. We find that the new highway on average increased housing prices in the treatment region by about 5%, but the effect on price differed substantially between the towns. The full impact on housing prices materialized when the new highway was opened. We estimate that the increase in total housing capital in the treatment region amounts to almost 84% of the construction costs of the new highway. Keywords Road investments. Infrastructure investments. Housing prices .

Dependence of Housing Real Estate Prices on Inflation as One of the Most Important Factors: Poland’s Case

“…The scientific literature also provides answers to the question of the dependence of real estate prices on the level of energy efficiency and thermal modernization (Pascuas et al, 2017), the factors of forced real estate sales (Renigier-Biłozor et al, 2018), and hedging inflation risks through investment in real estate (Salisu et al, 2020;Yeap & Lean 2017;Taderera & Akinsomi, 2020;Arnold & Auer, 2015), as well as the impact of improved road standards on housing prices (Theisen & Emblem, 2021). The dynamics of residential real estate prices for the Polish real estate market was investigated in Warsaw in different market segments (small, medium and large apartments in the primary and secondary market) and the dependence of prices between these segments (Brzezicka et al, 2019), real estate market analysis in Upper Silesia (Zuzańska-Żyśko, 2014) and analysis of foreign currency loans for housing (Buszko & Krupa, 2015).…”

Does Bike Sharing increase House Prices? Evidence from Micro-level Data and the Impact of COVID-19

“…Since the seminal contributions of Alonso ( 1964 ), Muth ( 1969 ), Mills ( 1972 ) and others, the relationship between housing prices and the monetary and time costs of commuting has been at the core of urban economics (Theisen and Emblem, 2021 ). We use this stream of literature as our theoretical base.…”

“…In this sense, we adopt the difference-in-differences approach (Angrist and Pischke, 2009 ), which is by now a standard approach used in the literature on the house price impacts of various infrastructures (e.g. Theisen and Emblem, 2021 ).…”