Impact of Airport Noise on Property Values

Abstract

The impact of airport noise on home prices has received much attention in North America, where many hedonic price studies have been performed to examine the issue. In developing countries, however, extremely limited academic work on this topic has been conducted. The recent opening of Suvarnabhumi Airport in Bangkok, Thailand, presented a unique opportunity to address this research gap. In this paper, sales data of new homes near the airport that were sold between 2002 and 2008 are used to examine both the anticipatory effect and actual effects of airport noise on home prices. On the basis of this data set, hedonic price models are estimated and subjected to various diagnostic tests, including those for heteroscedasticity and spatial autocorrelation. The results show no anticipatory effects of airport noise on prices before the beginning of airport operations in 2006. More important, prices of new properties sold after 2006 are 19.15% lower in the most severely affected area and 8.55% lower in moderately affected areas. These estimates imply a noise depreciation index of 2.12% per decibel, which is in the high range of values found in the literature and implies that the potential benefits of a noise reduction program at Suvarnabhumi Airport might be substantial.