Evaluating the Impact of Housing Construction on Single-Family Housing Values in Stockholm: A Difference-in-Difference Analysis

Our objective is to assess the impact of housing construction on single-family housing values. The impact of cities on climate change is significant, and reducing it requires measures such as promoting public transport and infill development. Cities can also use green spaces to lower temperatures and mitigate heat effects. However, urbanisation and a housing shortage require new construction, which raises many conflicting goals, such as conserving green areas and building near public transport. This project uses the difference-in-difference methodology in Stockholm, Sweden, to examine the price effect of multifamily and single-family housing construction on surrounding single-family houses. The study analyses approximately 480 housing construction projects between 2009 and 2014 and 17,000 single-family detached house transactions between 2005 and 2018. The results indicate that multifamily construction projects do not affect the value of surrounding single-family homes, while single-family home construction has a negative impact. This result can be explained by the fact that single-family housing projects are located directly adjacent to or in a single-family housing area with negative externalities. In contrast, multifamily housing projects are on the edge of single-family housing areas with positive externalities. A policy implication is that urban planners and policymakers must carefully evaluate construction near or in existing single-family housing areas to mitigate potential negative impacts.