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

Real Estate Economics (forthcoming)

30 Pages Posted: 9 Sep 2018 Last revised: 16 Feb 2019

See all articles by Zhengyi Zhou

Zhengyi Zhou

Shanghai University of Finance and Economics

Hong Chen

Shanghai Advanced Institute in Finance, Shanghai Jiao Tong University

Lu Han

University of Toronto - Rotman School of Management

Anming Zhang

University of British Columbia (UBC) - Sauder School of Business

Date Written: January 1, 2019

Abstract

Within the context of a transition economy, this paper 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 (CBD) 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.

Keywords: Housing price; Subway; Employment; China

JEL Classification: R23 R31 R41

Suggested Citation

Zhou, Zhengyi and Chen, Hong and Han, Lu and Zhang, Anming, The Effect of a Subway on House Prices: Evidence from Shanghai (January 1, 2019). Real Estate Economics (forthcoming), Available at SSRN: https://ssrn.com/abstract=3239760 or http://dx.doi.org/10.2139/ssrn.3239760

Zhengyi Zhou (Contact Author)

Shanghai University of Finance and Economics ( email )

100 Wudong Road
Shanghai, Shanghai 200433
China

Hong Chen

Shanghai Advanced Institute in Finance, Shanghai Jiao Tong University ( email )

Shanghai, 200052
China

Lu Han

University of Toronto - Rotman School of Management ( email )

105 St. George Street
Toronto, Ontario M5S 3E6 M5S1S4
Canada

Anming Zhang

University of British Columbia (UBC) - Sauder School of Business ( email )

2053 Main Mall
Vancouver, BC V6T 1Z2
Canada

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