The Effect of a New Subway Opening on House Prices Near Metropolitan Bus Stops in a New Town: The Case of the New Town of Gwanggyo

Abstract

This study examines the effect of a new subway opening on house prices near metropolitan bus stops, which provide the only means of transportation to Seoul before reaching the subway, in a new town. In the empirical analysis, a difference-in-differences is applied on the Gwanggyo housing market, where the Shinbundang Line has opened in 2016. Using over 4,800 apartment transaction data, empirical results suggest that the opening of the Shinbundang Line has a positive impact on house prices near metropolitan bus stops. Apartment prices increase within 300 m from metropolitan bus stops by up to approximately 10.9% after the opening of the Shinbundang Line. The results imply an overall increase in housing demand in the region due to the expansion of the transportation network. Likewise, the effects on price tend to be more significant in the long term, like in three years’ time, than in the short term, like in one and in two years’ time.