Does residential property price benefit from light rail in Sydney?

Abstract

Land rent theory identifies that unimproved land value is determined by its accessibility to goods and services. In theory, therefore, public transport provision which increases accessibility should in turn increase land values. The objective of this paper is to identify if land values in the neighbourhood of a light rail have sustained long run price increases due to the presence of the light rail. The motivation for the paper is whether public transport infrastructure creates sufficient uplift to land values that if it were captured it would make a significant contribution to the investment plans of government. This is especially important in contemporary Sydney as plans are being rolled out to implement new light rail systems by the NSW Government which, in common with many other governments, is subject to budgetary constraints which limits the implementation of all the transport infrastructure evaluated as good value for money.The case study of this paper is Sydney's Inner West Light Rail line which was built along the right of way of a former goods line. This line is 7.2 km light long with 14 stops and takes 28 min to travel from end to end.Using transaction house prices from 2011 as the dependent variable, this paper uses Geographically Weighted Regression (GWR) to identify the uplift attributable to the presence of the light rail. The attributes of the residential property (e.g. number of bedrooms, bathrooms etc) and neighbourhood effects, as measured by census data, are used as controlling independent variables to expose the value of the underlying unimproved land through its accessibility to public transport. The GWR methodology provides a global model as a first stage with the second stage of GWR providing a local model to examine the spatial distribution of the uplift to residential properties.The results show the expected and significant spatial variation in the value of accessibility. Overall, the light rail has had more impact outside the areas of the city centre. The analysis and discussion includes the different valuation of accessibility to bus services vis à vis accessibility to light rail services.