Abstract
Providing adequate public rental housing (PRH) of a decent quality at a desirable location is a major challenge in many cities. Often, a prominent opponent of PRH development is its host community, driven by a belief that PRH depreciates nearby property values. While this is a persistent issue in many cities around the world, this study proposed a new approach to assessing the impact of PRH on nearby property value. This study utilized a machine learning technique called long short-term memory (LSTM) to construct a set of housing price prediction models based on 547,740 apartment transaction records from the city of Busan, South Korea. A set of apartment characteristics and proximity measures to PRH were included in the modeling process. Four geographic boundaries were analyzed: The entire region of Busan, all neighborhoods of PRH, the neighborhoods of PRH in the “favorable,” and the “less favorable” local housing market. The study produced accurate and reliable price predictions, which indicated that the proximity to PRH has a meaningful impact on nearby housing prices both at the city and the neighborhood level. The approach taken by the study can facilitate improved decision making for future PRH policies and programs.
Highlights
Housing is an essential human need that shapes the well-being of all citizens
The proximity effect of public rental housing (PRH) on housing prices was investigated with four price prediction models using long short-term memory (LSTM)
The results show that the predicted pattern resembled the observed pattern very well, but with a slight upwards offset for almost the entire period. This result is meaningful because it is unique to the spatial boundary selected, and because it presented a unidirectional error of the prediction model that lasted over time. This suggests that the housing prices in those neighborhoods were likely suppressed by other external factors that were not accounted for in this study, such as the effect of housing policy, macroeconomic factors, and local housing market factors
Summary
Housing is an essential human need that shapes the well-being of all citizens. As most cities around the world are faced with the overwhelming burden of housing costs, establishing housing affordability is a core policy objective in many countries [1]. Thanks to advancements in construction technology and the management of public housing, PRH has become an effective method for supplying a large number of rental units in good condition. It is one of the major modes through which affordable housing is supplied in many countries, including Korea. As of 2017, PRH accounted for approximately 7% of the entire housing stock [25] While it can be developed and managed by both the public and private sectors, government-subsidized PRH is much more prevalent, taking up nearly 87% of all types [26]
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