A study of metro’s influence on the primary housing market in Warsaw, Poland

Abstract

Residential real estate prices vary significantly, being susceptible to numerous components. One of the most contributing factors is thought to be the proximity of an underground train (metro) station. Classically, the relationship between housing prices and distance to a metro station is measured by a hedonic model. This paper presents a new method to study such a relationship, and it is a new composite index - Metro Station Proximity Effect Estimator (MSPEE), which allows looking at differences between not only metro stations but also the city districts. The MSPEE index was calculated as a mean of a set of sub-indicators, assembled as variables determining the final value of the composite indicator. Through the MSPEE index as well as more traditional methods, the paper suggests and illustrates a generally strong negative correlation between the proximity of Metro and apartment prices. Moreover, the study lists and describes exceptions to the trend around Warsaw.