SpringerLink
Log in

Transportation infrastructure improvement and real estate value: impact of level crossing removal project on housing prices

  • Published:
Transportation Aims and scope Submit manuscript

Abstract

This paper studies the impact of removing the level crossing, which constitutes traffic hazard to the society, on house prices by conducting a quasi-natural experiment using the Level Crossing Removal Project (LXRP) implemented by the Victoria state government in Australia since 2015. Using a difference-in-differences method, we analyzed the changes in housing prices due to the improvement of transportation infrastructure, gauging the LXRP’s impact on house and unit submarkets separately. We found that the prices for house and unit markets increased significantly after the removal of level crossings, with the value uplift decreasing with distance from the removal site. This paper contributes to the existing literature by adding an empirical study related to the enhancement of infrastructure aiming to improve the traffic safety in the urban context. Unlike previous studies, this study examines the effect of improvement projects for existing infrastructure and provides relevant implications to improve the efficiency of investing public resources in infrastructure improvement.

This is a preview of subscription content, log in via an institution to check access.

Access this article

Log in via an institution

Subscribe and save

Springer+ Basic
EUR 32.99 /Month
  • Get 10 units per month
  • Download Article/Chapter or Ebook
  • 1 Unit = 1 Article or 1 Chapter
  • Cancel anytime
Subscribe now

Buy Now

Price includes VAT (France)

Instant access to the full article PDF.

Institutional subscriptions

Fig. 1
Fig. 2
Fig. 3
Fig. 4
Fig. 5

Similar content being viewed by others

Notes

  1. The report shows the variations of time saving in different sites. https://www.theage.com.au/national/victoria/just-a-minute-level-crossing-project-resulting-in-small-time-savings-data-shows-20180123-p4yys5.html.

  2. It is known that the level crossings in the first removal project were selected based on the safety issue, boom gate downtime during the peak hours, and general congestion level. For more information, please see https://www.abc.net.au/news/2015-06-23/st-albans-level-crossing-to-be-removed-by-2018/6566198.

  3. Information on ABS can be found here: https://www.abs.gov.au/statistics/people/population/national-state-and-territory-population/latest-release#media-releases.

  4. The population of NSW increased from 66,763 in 2012–2013 to 90,050 in 2017–2018, a rate of 34.88%.

  5. The 30-year infrastructure strategy can be found here: http://www.infrastructurevictoria.com.au/wp-content/uploads/2019/03/IV_30_Year_Strategy_WEB_V2.pdf.

  6. More information regarding the LXRP can be found here: https://levelcrossings.vic.gov.au/about.

  7. https://levelcrossings.vic.gov.au/about.

  8. The term “unit” could mean townhouse or condominium in mid- or high-rise building. In our sample, “land size” means lot size in case of townhouses and floor area for condominium.

  9. We have tried to include other neighbourhood attributes such as distance to CBD and unemployment rate of the suburb as control variables in our models, but these two variables are not used in the multilevel models because they are highly correlated with the suburb density and household income (as depicted in our VIF results). So, we do not include them in our models to avoid the collinearities issue. Further, all the neighbourhood attributes control variables are highly correlated with the suburb/postcode dummy variables/fixed effect according to the VIF test results, thus we do not include them in Models 1 to 5, which have controlled for the suburb/postcode fixed effect.

  10. More information regarding this flood can be found on the Level Crossing Removal website: https://levelcrossings.vic.gov.au/__data/assets/pdf_file/0010/216001/FRA0069-NMC_Flooding-Report.pdf.

  11. Regardless of the ex post and ex ante removal of level crossing, the coefficients of Fals Area picks up the average time-invariant price difference between the treated and control area. Even though the statistical significance varies across different models, we find that the magnitude of price difference is quite similar. This means that the price level of falsified treatment area has higher level of property price. The reason why the coefficient of the last column is due to the additional specification of postcode interaction. While the coefficients of Fals Area in column (1)-(4) pick up the price difference between treatment and control area, the last column shows the price difference across areas using different postcodes. Thus, the meaning of coefficient of Fals Area in column (5) is different from the ones in column (1)–(4)..

  12. Similar to the interpretation of column (5) of Table 6, the sign of Treat Area in column (5) of Table 8 Panel B is different from the ones in column (1)-(4). Column (5) is based on the argument that each boundary effect should be controlled for to better explain the heterogeneity across different region (Dhar and Ross 2012). In this paper, we control for the boundary effect by including the interaction of postcode and treatment area. Thus, it is natural that some of the postcodes show significant difference and sign in real estate price.

References

  • Al-Mosaind, M.A., Dueker, K.J. and Strathman, J.G.: Light-Rail Transit Stations and Property Values: A Hedonic Price Approach (No. 1400) (1993)

  • Alonso, W.: Location and land use. Toward a general theory of land rent. Location and land use. Toward a general theory of land rent, (1964)

  • Agarwal, S., Koo, K.M.: Impact of electronic road pricing (ERP) changes on transport modal choice. Regional Sci. Urban Econ. 60, 1–11 (2016)

    Article  Google Scholar 

  • Agarwal, S., Koo, K.M., Sing, T.F.: Impact of electronic road pricing on real estate prices in Singapore. J. Urban Econ. 90, 50–59 (2015)

    Article  Google Scholar 

  • Armstrong, R.J., Rodriguez, D.A.: An evaluation of the accessibility benefits of commuter rail in eastern Massachusetts using spatial hedonic price functions. Transportation 33(1), 21–43 (2006)

    Article  Google Scholar 

  • Bangura, M., Lee, C.L.: House price diffusion of housing submarkets in Greater Sydney. Housing Stud. 35(6), 1110–1141 (2020a)

    Article  Google Scholar 

  • Bangura, M., Lee, C.L.: Housing price bubbles in Greater Sydney: evidence from a submarket analysis. Housing Stud. (2020b). https://doi.org/10.1080/02673037.2020.1803802

    Article  Google Scholar 

  • Bajari, P., Fruehwirth, J.C., Timmins, C.: A rational expectations approach to hedonic price regressions with time-varying unobserved product attributes: the price of pollution. Am. Econ. Rev. 102(5), 1898–1926 (2012)

    Article  Google Scholar 

  • Bowes, D.R., Ihlanfeldt, K.R.: Identifying the impacts of rail transit stations on residential property values. J. Urban Econ. 50(1), 1–25 (2001)

    Article  Google Scholar 

  • Breidt, F.J., Opsomer, J.D.: Local polynomial regression estimators in survey sampling. Ann. Stat. 1, 1026–1053 (2000)

    Google Scholar 

  • Brown, J., Thompson, G., Bhattacharya, T., Jaroszynski, M.: Understanding transit ridership demand for the multidestination, multimodal transit network in Atlanta, Georgia: lessons for increasing rail transit choice ridership while maintaining transit dependent bus ridership. Urban Stud. 51(5), 938–958 (2014)

    Article  Google Scholar 

  • Brueckner, J. K.: The structure of urban equilibria: A unified treatment of the Muth-Mills model. In: Edwin SM (ed.) Handbook of Regional and Urban Economics, pp. 821–845, (1987)

  • Burke, M., Brown, A.L.: Distances people walk for transport. Road Transp. Res. A J. Aust. New Zealand Res. Practice 16(3), 16 (2007)

    Google Scholar 

  • Camins-Esakov, J., Vandegrift, D.: Impact of a light rail extension on residential property values. Res. Transp. Econ. 67, 11–18 (2018)

    Article  Google Scholar 

  • Cervero, R., Duncan, M.: Transit’s value-added effects: light and commuter rail services and commercial land values. Transp. Res. Rec. 1805(1), 8–15 (2002)

    Article  Google Scholar 

  • Cervero, R., Kang, C.D.: Bus rapid transit impacts on land uses and land values in Seoul Korea. Transp. Policy 18(1), 102–116 (2011)

    Article  Google Scholar 

  • Chen, H., Rufolo, A., Drucker, K.: Measuring the impact of light rail systems on single-family home values: a hedonic approach with geographic information system application. Transp. Res. Rec. 1617, 38–43 (1998)

    Article  Google Scholar 

  • Ćirović, G., Pamučar, D.: Decision support model for prioritizing railway level crossings for safety improvements: application of the adaptive neuro-fuzzy system. Expert Syst. Appl. 40(6), 2208–2223 (2013)

    Article  Google Scholar 

  • Council, S.T., 2010. National Railway Level Crossing Safety Strategy 2010/2020

  • Debrezion, G., Pels, E., Rietveld, P.: The impact of railway stations on residential and commercial property value: a meta-analysis. J. Real Estate Finance Econ. 35(2), 161–180 (2007)

    Article  Google Scholar 

  • Debrezion, G., Pels, E., Rietveld, P.: The impact of rail transport on real estate prices: an empirical analysis of the Dutch housing market. Urban Stud. 48(5), 997–1015 (2011)

    Google Scholar 

  • Deng, T., Ma, M., Nelson, J.D.: Measuring the impacts of bus rapid transit on residential property values: the Bei**g case. Res. Transp. Econ. 60, 54–61 (2016)

    Article  Google Scholar 

  • Dhar, P., Ross, S.L.: School district quality and property values: Examining differences along school district boundaries. J. Urban Econ. 71(1), 18–25 (2012)

    Article  Google Scholar 

  • Diao, M., Leonard, D., Sing, T.F.: Spatial-difference-in-differences models for impact of new mass rapid transit line on private housing values. Reg. Sci. Urban Econ. 67, 64–77 (2017)

    Article  Google Scholar 

  • Du, H., Mulley, C.: The short-term land value impacts of urban rail transit: quantitative evidence from Sunderland. UK. Land Use Policy 24(1), 223–233 (2007)

    Article  Google Scholar 

  • Duncan, M.: Comparing rail transit capitalization benefits for single-family and condominium units in San Diego. California. Transportation Research Record 2067(1), 120–130 (2008)

    Article  Google Scholar 

  • Efthymiou, D., Antoniou, C.: How do transport infrastructure and policies affect house prices and rents? Evidence from Athens, Greece. Transp. Res. Part A: Policy Pract. 52, 1–22 (2013)

    Google Scholar 

  • Feng, H., Lu, M.: School quality and housing prices: empirical evidence from a natural experiment in Shanghai China. J. Housing Econ. 22(4), 291–307 (2013)

    Article  Google Scholar 

  • Gatzlaff, D.H., Smith, M.T.: The impact of the Miami Metrorail on the value of residences near station locations. Land Econ. 1, 54–66 (1993)

    Article  Google Scholar 

  • Hawkins, J., Habib, K.N.: Spatio-temporal hedonic price model to investigate the dynamics of housing prices in contexts of urban form and transportation services in Toronto. Transp. Res. Rec. 2672(6), 21–30 (2018)

    Article  Google Scholar 

  • King, G., Nielsen, R.: Why propensity scores should not be used for matching. Polit. Anal. 27(4), 435–454 (2019)

    Article  Google Scholar 

  • Koo, K. M., Liang, J.: The Effect of bilingual education on housing price-A case study of bilingual school conversion. J. Real Estate Finance Econ. (2020)

  • Landis, J., Guhathakurta, S., Zhang, M.: Capitalization of transit investments into single-family home prices: A comparative analysis of five California rail transit systems, (1994)

  • Le Boennec, R., Salladarré, F.: The impact of air pollution and noise on the real estate market. The case of the 2013 European green capital: nantes, France. Ecol. Econ. 138, 82–89 (2017)

    Article  Google Scholar 

  • Lee, C.L., Locke, M.: The effectiveness of passive value capture mechanisms in funding infrastructure. J. Prop. Invest. Finance (2020). https://doi.org/10.1108/JPIF-07-2020-0084

    Article  Google Scholar 

  • Lee, C.L., Reed, R.G.: The relationship between housing market intervention for first-time buyers and house price volatility. Housing Stud. 29(8), 1073–1095 (2014)

    Article  Google Scholar 

  • Lewis-Workman, S., Brod, D.: Measuring the neighborhood benefits of rail transit accessibility. Transp. Res. Rec. 1576, 147–153 (1997)

    Article  Google Scholar 

  • Levkovich, O., Rouwendal, J., van Marwijk, R.: The effects of highway development on housing prices. Transportation 43(2), 379–405 (2016)

    Article  Google Scholar 

  • Linden, L., Rockoff, J.E.: Estimates of the impact of crime risk on property values from Megan’s laws. Am. Econ. Rev. 98(3), 1103–1127 (2008)

    Article  Google Scholar 

  • Ma, L., Reed, R., Liang, J.: Separating owner-occupier and investor demands for housing in the Australian states. J. Prop. Invest. Finance 32(2), 215–232 (2019)

    Article  Google Scholar 

  • Mayer, T., Trevien, C.: The impact of urban public transportation evidence from the Paris region. J. Urban Econ. 102, 1–21 (2017)

    Article  Google Scholar 

  • Meiers, S., Guo, H., Levasseur, M.: Crossing, vehicle and environmental characteristics influence on crash likelihood in Australia and New Zealand. In: Global Level Crossing and Trespass Symposium, (2012)

  • Mills, E.S.: An aggregative model of resource allocation in a metropolitan area. Am. Econ. Rev. 57(2), 197–210 (1967)

    Google Scholar 

  • Mok, S.C., Savage, I.: Why has safety improved at rail-highway grade crossings? Risk Anal. Int. J. 25(4), 867–881 (2005)

    Article  Google Scholar 

  • Mulley, C.: Accessibility and residential land value uplift: Identifying spatial variations in the accessibility impacts of a bus transitway. Urban Stud. 51(8), 1707–1724 (2014)

    Article  Google Scholar 

  • Mulley, C., Tsai, C.-H.: When and how much does new transport infrastructure add to property values? Evidence from the bus rapid transit system in Sydney, Australia. Transp. Policy 51, 15–23 (2016)

    Article  Google Scholar 

  • Mulley, C., Tsai, C.-H.: Impact of bus rapid transit on housing price and accessibility changes in Sydney: a repeat sales approach. Int. J. Sustain. Transp. 11, 3–10 (2017)

    Article  Google Scholar 

  • Mulley, C., Sampaio, B., Ma, L.: South Eastern busway network in brisbane, Australia: value of the network effect. Transp. Res. Rec. 2647(1), 41–49 (2017)

    Article  Google Scholar 

  • Mulley, C., Tsai, C.H.P., Ma, L.: Does residential property price benefit from light rail in Sydney? Res. Transp. Econ. 67, 3–10 (2018)

    Article  Google Scholar 

  • Muth, R.: Cities and housing: the spatial patterns of urban residential land use. University of Chicago Press, Chicago (1969)

    Google Scholar 

  • Ossokina, I.V., Verweij, G.: Urban traffic externalities: quasi-experimental evidence from housing prices. Regional Sci. Urban Econ. 55, 1–13 (2015)

    Article  Google Scholar 

  • Pan, Q.: The impacts of an urban light rail system on residential property values: a case study of the Houston METRORail transit line. Transp. Plann. Technol. 36(2), 145–169 (2013)

    Article  Google Scholar 

  • Parry, I.W., Walls, M., Harrington, W.: Automobile externalities and policies. J. Econom. Lit. 45(2), 373–399 (2007)

    Article  Google Scholar 

  • Rodriguez, A., Targa, F.: Value of accessibility to Bogotá’s bus rapid transit system. Transp. Rev. 24(5), 587–610 (2004)

    Article  Google Scholar 

  • Ryan, S.: Property values and transportation facilities: finding the transportation-land use connection. J. Plan. Literat. 13(4), 412–427 (1999)

    Article  Google Scholar 

  • Shipman, J.E., Swanquist, Q.T., Whited, R.L.: Propensity score matching in accounting research. Account. Rev. 92(1), 213–244 (2016)

    Article  Google Scholar 

  • The Age. Available at: https://www.theage.com.au/national/victoria/level-crossing-removal-program-poor-value-for-money-auditorgeneral-andrew-greaves-20171214-h04ed0.html. Accessed 23 Oct 2018

  • Trends, A. A. S.: July 2013-Car Nation. Australian Bureau of Statistics, (2014)

  • Wullems, C.: Towards the adoption of low-cost rail level crossing warning devices in regional areas of Australia: a review of current technologies and reliability issues. Saf. Sci. 49(8–9), 1059–1073 (2011)

    Article  Google Scholar 

  • Valadkhani, A., Smyth, R.: Self-exciting effects of house prices on unit prices in Australian capital cities. Urban Stud. 54(10), 2376–2394 (2017)

    Article  Google Scholar 

  • Voith, R.: Changing capitalization of CBD-oriented transportation systems: evidence from Philadelphia, 1970–1988. J. Urban Econ. 33, 361–376 (1993)

    Article  Google Scholar 

  • Yen, B.T., Mulley, C., Shearer, H., Burke, M.: Announcement, construction or delivery: when does value uplift occur for residential properties? Evidence from the Gold Coast Light Rail system in Australia. Land Use Policy 73, 412–422 (2018)

    Article  Google Scholar 

  • Yen, B.T., Mulley, C., Shearer, H.: Different Stories from different approaches in evaluating property value uplift: evidence from the gold coast light rail system in Australia. Transp. Res. Rec. 2673(3), 11–23 (2019)

    Article  Google Scholar 

  • Zhong, H., Li, W.: Rail transit investment and property values: an old tale retold. Transp. Policy 51, 33–48 (2016)

    Article  Google Scholar 

  • Zhu, J., Fan, Y.: Daily travel behavior and emotional well-being: effects of trip mode, duration, purpose, and companionship. Transp. Res. Part A 118, 360–373 (2018a)

    Google Scholar 

  • Zhu, J., Fan, Y.: Commute happiness in **’an, China: effects of commute mode, duration, and frequency. Travel Behav. Soc. 11, 43–51 (2018b)

    Article  Google Scholar 

Download references

Author information

Authors and Affiliations

  1. Department of Finance, Faculty of Business and Law, Deakin University, 70 Elgar Road, Burwood, VIC, 3125, Australia

    Jian Liang & Kang Mo Koo

  2. UNSW Built Environment, University of New South Wales, Gate 8, High Street, Kensington, NSW, 2052, Australia

    Chyi Lin Lee

Authors
  1. Jian Liang
    View author publications

    You can also search for this author in PubMed Google Scholar

  2. Kang Mo Koo
    View author publications

    You can also search for this author in PubMed Google Scholar

  3. Chyi Lin Lee
    View author publications

    You can also search for this author in PubMed Google Scholar

Contributions

All authors contributed to the study conception. Methodology design, data collection and analysis were performed by Jian Liang and Kang Mo Koo. All authors engaged in the writing of the first draft of the paper. In the first draft, chapters 4 to 7 were written by Jian Liang, chapters 2 and 8 were written by Kang Mo Koo, and chapters 1 and 3 were written by Chyi Lin Lee. All authors commented and revised on previous versions of the manuscript. All authors read and approved the final manuscript.

Corresponding author

Correspondence to Jian Liang.

Ethics declarations

Conflict of interest

On behalf of all authors, the corresponding author states that there is no conflict of interest.

Additional information

Publisher's Note

Springer Nature remains neutral with regard to jurisdictional claims in published maps and institutional affiliations.

Appendix

Appendix

See Tables 7, 8, 9, 10, and 11.

Table 7 Setting of treatment area and control area in each test
Full size table
Table 8 Robustness test using nearest unremoved level crossing site as control group
Full size table
Table 9 Entropy balancing analysis of house submarket
Full size table
Table 10 Entropy balancing analysis of unit submarket
Full size table
Table 11 Robustness test with McKinnon site affected by flooding
Full size table

Rights and permissions

Reprints and permissions

About this article

Check for updates. Verify currency and authenticity via CrossMark

Cite this article

Liang, J., Koo, K.M. & Lee, C.L. Transportation infrastructure improvement and real estate value: impact of level crossing removal project on housing prices. Transportation 48, 2969–3011 (2021). https://doi.org/10.1007/s11116-020-10157-1

Download citation

  • Published:

  • Issue Date:

  • DOI: https://doi.org/10.1007/s11116-020-10157-1

Keywords

JEL Classification

Search

Navigation