The Benefit of Rail: Estimating the Impact of Station Accessibility on Residential Property Prices

Abstract

This article focuses on the relationship between the prices and the distance from a metro or commuter railway station to residential properties. Relevant efforts have already been dedicated to estimating the effect of station accessibility, but one of the key limitations of previous studies was the heterogeneity of real estate. Here, the data on homogeneous real estate type in Budapest, Hungary, namely panel flats (built with uniform technology between the 1960s and 1990s) are analysed by statistical methods. First, it is demonstrated that this real estate type is indeed highly homogenous. Second, linear regression is used to understand the relationship and its magnitude between flat prices and distance of stations. The results show a statistically significant relationship, i.e., that five additional minutes of travel time to the nearest station providing fast access to the city centre makes real estate prices drop by nearly 1%. In light of current policies promoting rail for passenger transportation, the findings may be applied for value capture policies to increase the viability and feasibility of urban railway projects.