Suburban Housing Creation: Result of Transit Network Expansion in Central City

37 Pages Posted: 14 Jul 2023

See all articles by Wen-Chi Liao

Wen-Chi Liao

NUS Business School, National University of Singapore

Kecen Jing

School of Economics, Nankai University

Yilan Luo

School of Economics and Trade, Hunan University

Multiple version iconThere are 2 versions of this paper

Date Written: July 12, 2023

Abstract

Housing affordability is often concerning in superstar cities. Like the Taipei metropolis, housing is too expensive in the fully built-up central city, but jobs are there. How can the government incentivize developers to create new housing in areas where households need not be stretch commuters? This research analyzes how public-transport network expansion in the central city of Taipei induced new housing projects in distant suburbs with metro services. Difference-in-differences assesses the impacts of two metro lines’ completions on neighborhood housing prices; a 1% better commuter market access increased home values by 0.33%. For every neighborhood, land values of homes are uncovered to gauge average land price and construction permits are used to aggregate new housing launches, resulting in a balanced panel of annual neighborhood data. IV Tobit addresses demand-supply determination and contextualizes developable lands as real options, with commuter market access instrumenting land prices. Consistent with theory, developments are stimulated by returns but deterred by uncertainty. Outside the central city of Taipei, annual housing construction was 2.26% more in housing units and 4.00% more in gross floor area in neighborhoods with metro-station access than those without. A 1% better commuter market access increased the annual construction by 2.47% in units and 3.76% in GFA. Transit network expansion to cover more places in the central city can stimulate housing construction in commutable suburbs where citizens can enjoy relatively more affordable housing and mobility at the same time. We recommend a policy for the sustainable development of real estate, public transportation, and cities.

Keywords: housing affordability, housing supply, superstar cities, real option, public transport, transit oriented development

JEL Classification: R00, R21, R31, R38, R40, H42, L92

Suggested Citation

Liao, Wen-Chi and Jing, Kecen and Luo, Yilan, Suburban Housing Creation: Result of Transit Network Expansion in Central City (July 12, 2023). MIT Center for Real Estate Research Paper No. 23/15, Available at SSRN: https://ssrn.com/abstract=4508108 or http://dx.doi.org/10.2139/ssrn.4508108

Wen-Chi Liao (Contact Author)

NUS Business School, National University of Singapore ( email )

15 Kent Ridge Drive
Singapore, 119245
Singapore

HOME PAGE: http://bizfaculty.nus.edu.sg/faculty-details/?profId=663

Kecen Jing

School of Economics, Nankai University ( email )

Weijin Road 94
Tianjin, 300071
China

Yilan Luo

School of Economics and Trade, Hunan University ( email )

China

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