Impacts of COVID-19 on the premiums of proximity to railway stations: An in-depth analysis using passenger flows

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As a result of the coronavirus (COVID-19) pandemic, work and leisure patterns have changed significantly, as have commuting and travel behavior. This has led to changes in the degree of dependence and demand for mass transportation. This paper proposes that these changes decrease people's demand to live near public transportation services and cause the decline of the positive externality created by public transit as measured by house prices. This paper explores the train stations of Taiwan's two largest cities (Taipei and Kaohsiung) by adopting various hedonic price models to estimate the COVID-19 effect on the premiums of proximity to rail stops. We then analyze whether the changes in premiums are affected by the passenger flow at the station. This paper uses four variables to measure passenger flows: the number of total passengers on services, the net number of passengers (the number leaving the local area minus the number of arriving at the local area), and the expected numbers of commuters and non-commuters. The empirical results of this paper show that after the COVID-19 outbreak, the monetary value of the proximity of railway stations decreased significantly. However, the COVID-19 effect on different stations is heterogeneous. The post-COVID-19 decrease in the positive externality associated with proximity to a rail station is significantly affected by passenger flows. The changes in the positive externality of stations found in this study suggest the public has reduced their dependence on stations due to changes in commuting behavior. We urge the government to pay attention to whether the commuting flows and the public's demand for public transportation have shifted and the use of vehicles and road transportation has risen.