Abstract
PurposeThis paper aims to analyze how nearby property prices are affected by new construction projects in Stockholm. If there is an impact on property prices, the authors endeavor to investigate whether the effects vary among different areas within the municipality, for different groups of inhabitants and for different types of housing (i.e. public versus private housing).Design/methodology/approachThe authors use a difference-in-difference specification in a hedonic model, and the sample consists of more than 90,000 observations over the period 2005-2013.FindingsThe results are robust and indicate that house prices in nearby areas increase following the completion of infill development. The results also indicate that infill development has a positive spillover effect on nearby dwelling prices only in areas with lower incomes, more public housing units and more inhabitants born abroad.Originality/valueIt provides an analysis on how nearby property prices are affected by new construction projects by creating a restricted control area, so as to make the treatment group and the control group more homogeneous. Thus, it mitigates any potential problems with spatial dependency, which can cause biased standard errors.
Highlights
A combination of strong urbanization and incentives to use land more efficiently in many European and US city areas has led to arguments for infill development[1] (Duany et al, 2010; Farris, 2001; McConnell and Wiley, 2010; Steinacker, 2003)
This paper provides an analysis of how nearby property prices are affected by new construction projects in Stockholm, which is segregated in economic and ethnic terms and experiences high levels of in-migration from other parts of Sweden
Conclusion and policy implications A combination of strong urbanization and shortage of land in many European city areas prompts an impetus of infill development, with current residents often raising concerns that lower nearby property prices
Summary
A combination of strong urbanization and incentives to use land more efficiently in many European and US city areas has led to arguments for infill development[1] (Duany et al, 2010; Farris, 2001; McConnell and Wiley, 2010; Steinacker, 2003). Current residents often raise concerns that infill development lowers nearby property prices. Research evidence far is mixed, with some studies showing that infill development projects lead to a positive impact on property prices The full terms of this licence may be seen at http://creativecommons.org/licences/by/4.0/ legalcode
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