The Impact of Subway Network Expansion on Housing Rents: An Empirical Study in Beijing, China

Abstract

Most previous studies have focused on the impact of subways on housing prices instead of rents, while the latter could better measure residential values. Based on a dataset collected from a real estate agency in Beijing, which contains more than 900,000 housing rental transaction records from 2011 to 2020, this paper empirically evaluates the causal effect of subway network expansion on housing rents. It employs a series of progressive difference-in-difference (DID) approaches, to estimate the impact and determine the impact scope. The findings demonstrate that a reduction of the distance to subway stations by 1 km increases the rents by 2.32%; the impact scope is about 1.5 km and the average rent appreciation within the range is 5%. The addition of a line for non-transfer stations raises the rents by 10% for houses 1.5-2 km away from the stations, extending the impact scope. Houses with large areas in upscale and old neighborhoods near the city center are affected less by subways. It also confirms the siphon effect in the rental market, i.e.: rents of houses far away from the new stations fall after the opening of the stations.