The effect of transport innovation on property prices: A study on the new commuter line between Uppsala and Älvsjö

Abstract: The aim of this paper is to investigate the impact of transport innovation on housing prices. More precisely, I study the effects on housing prices of the new commuter line (J38) between Uppsala and Älvsjö that started on December 9, 2012. The properties covered in the analysis are located around the 11 station stops between Uppsala and Älvsjö. This transport innovation was initiated to increase integration between Uppsala County and Stockholm County. Using the start of the J38 line as a quasi-experiment in a hedonic price model, I compare the changes in housing prices in treated areas and untreated areas after the introduction of the new line. Separate models are estimated for properties in “Housing Cooperative” (Bostadsrätt), and in “Home Ownership” (Äganderätt). The models include contract prices at which the property is sold, house characteristics, distance to nearest rail station, bus station, water and time-fixed effects. The results suggest that apartment prices (in housing cooperative) were negatively affected by the new line, whereas the effect for house prices (home ownership) is not statistically significant different from zero. Key words: Housing Prices, Transport Innovation, Housing cooperative, Home Ownership, Distance to Commuter Station, Hedonic Price Model, Difference-in-Difference.