Do urban rail transit facilities affect housing prices? Evidence from China

Abstract

Urban rail transit facilities play a critical role in citizen's social activities (e.g., residence, work and education). Using panel data on housing prices and urban rail transit facilities for 35 Chinese cities for 2002 to 2013, this study constructs a panel data model to evaluate the effect of rail transit facilities on housing prices quantitatively. A correlation test reveals significant correlations between housing prices and rail transit facilities. Empirical results demonstrate that rail transit facilities can markedly elevate real estate prices. Quantitatively, a 1% increase in rail transit mileage improves housing prices by 0.0233%. The results highlight the importance of other factors (e.g., per capita GDP, land price, investment in real estate and population density) in determining housing prices. We also assess the effects of expectations of new rail transit lines on housing prices, and the results show that expectation effects are insignificant. These findings encourage Chinese policy makers to take rail transit facilities into account in achieving sustainable development of real estate markets.