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The Effect of a Subway on House Prices: Evidence from Shanghai

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  • Zhengyi Zhou
  • Hong Chen
  • Lu Han
  • Anming Zhang

Abstract

Within the context of a transition economy, this article estimates how improved access to employment centers is capitalized into house price. We conduct an event study for the opening of subway Line 6 in Pudong district, Shanghai, China. The new line significantly reduces the commuting time to major employment centers. Other things being equal, easier commutes to the central business district center result in an average house price appreciation of 3.75%, with the most distant residential zone enjoying the largest appreciation. When taking into account multiple employment centers, we find that the largest source of appreciation is from an improved access to a suburb center with poor initial accessibility and attractive job opportunities. Finally, the total appreciation caused by time savings to major employment centers decreases with neighborhood income level and increases with the distance from Line 6 stations.

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  • Zhengyi Zhou & Hong Chen & Lu Han & Anming Zhang, 2021. "The Effect of a Subway on House Prices: Evidence from Shanghai," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 49(S1), pages 199-234, March.
    • Handle: RePEc:bla:reesec:v:49:y:2021:i:s1:p:199-234
    DOI: 10.1111/1540-6229.12275
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    3. Rennert, Lindiwe, 2022. "A meta-analysis of the impact of rail stations on property values: Applying a transit planning lens," Transportation Research Part A: Policy and Practice, Elsevier, vol. 163(C), pages 165-180.
    4. Wei He & Ruqing Zhao & Shu Gao, 2024. "Exploring the Impact of Multimodal Access on Property and Land Economies in Shanghai’s Inner Ring Districts: Leveraging Advanced Spatial Analysis Techniques," Land, MDPI, vol. 13(3), pages 1-19, February.
    5. Chang, Zheng & Füss, Roland & von Möllendorff, Johannes & Olaf Olaussen, Jon & Weigand, Alois, 2023. "Metro’s night travel offer on the weekend and its impact on house prices," Transportation Research Part A: Policy and Practice, Elsevier, vol. 178(C).
    6. Laura Gabrielli & Aurora Greta Ruggeri & Massimiliano Scarpa, 2023. "“Location, Location, Location”: Fluctuations in Real Estate Market Values after COVID-19 and the War in Ukraine Based on Econometric and Spatial Analysis, Random Forest, and Multivariate Regression," Land, MDPI, vol. 12(6), pages 1-23, June.
    7. Zachary T. Keeler & Heather M. Stephens, 2023. "The capitalization of metro rail access in urban housing markets," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 51(3), pages 686-720, May.
    8. Han, Dan & Wu, Shuping, 2023. "The capitalization and urbanization effect of subway stations: A network centrality perspective," Transportation Research Part A: Policy and Practice, Elsevier, vol. 176(C).
    9. Rojas, Alexandra, 2024. "Train stations’ impact on housing prices: Direct and indirect effects," Transportation Research Part A: Policy and Practice, Elsevier, vol. 181(C).
    10. Liang, Cong & Huang, Yaoxuan & Yip, Tsz Leung & Li, Victor Jing, 2022. "Does rail transit development gentrify neighborhoods? Evidence from Hong Kong," Transportation Research Part A: Policy and Practice, Elsevier, vol. 155(C), pages 354-372.
    11. Wang, Lisha & Miwa, Tomio & Jiang, Meilan & Morikawa, Takayuki, 2021. "Heterogeneous residential distribution changes and spillover effects by railway projects: The case study of Nagoya, Japan," Transportation Research Part A: Policy and Practice, Elsevier, vol. 154(C), pages 145-163.
    12. Diao, Mi & Li, Qiang & Sing, Tien Foo & Zhan, Changwei, 2023. "Disamenities of living close to transit tracks: Evidence from Singapore's MRT system," Regional Science and Urban Economics, Elsevier, vol. 100(C).

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