The Value of Public Transport in House Pricing: Evidence from Property Listing Websites
with Stefano Colonnello; the first draft soon available
This paper builds on the housing price data we collect under the IWH Housing Index Initiative and studies the role of access to public transport in housing pricing. House prices vary for different reasons, most of which can be accounted for by its physical features such as the size of the house, the number of bedrooms and the location of the house. However, there is also many intangible aspects of the housing that are critical to the valuation of housing, such as safety of the neighborhood, availability of high-quality schools and the air and noise pollution levels. In this paper, we look at one specific feature of the intangibles --- access to public transport. We investigate whether such intangible element is priced at the market or it remains as positive externalities. We first propose a theoretical framework based on standard Campbell-Shiller asset pricing decomposition to explain how the public transport access enters the house pricing. Empirically, we study the effect of in the proximity of public transportation on the housing listing prices (both rental and sales) in Metropolitan areas in Germany. We use the voluntary description of the transportation condition provided by the listing agencies or owners as the measure of proximity to public transport. In addition to qualitative analysis, we take advantage of the large sample size and adopt the econometric matching method to estimate the price difference attributed to public transport access.