Impact of urban railway announcements on housing market: Preponderance of pre-construction and post-construction phase effect of urban railway projects

Abstract

The increasing concerns arising from measuring the effect of metro railway line projects on the sale prices of surrounding housing within urban spaces have been addressed in a vast number of related studies. However, potential changes in these effects with regard to short-run and long-run equilibriums have not been studied satisfactorily in developing countries. Therefore, this paper measures the effect of metro railway line investments on housing sale prices with respect to two different stages of related projects: pre-construction stage and post-construction stage, in two similar study areas in İstanbul, Turkey. The prices of houses are modeled using hedonic price models. The results indicate that housing sale prices before construction (announcement) of the metro railway line projects increase almost twofold after construction. In addition, the paper employs a before and after analysis to measure the effect of the different stages of metro railway line investments on housing sale prices. The results reveal that the average price increase of a housing unit in the pre-construction phase of the metro railway line project is 86,756.37 TL greater than the average price increase in the post-construction phase. Thus, the validity of the speculated effect of such urban railway investments on housing sale prices is justified.