Impacts of urban renewal on neighborhood housing prices: predicting response to psychological effects

Abstract

As housing prices are largely affected by location characteristics, the failure to consider the spatial dependence of housing prices may result in overvaluation. In view of this issue, the first objective of this study was to combine the difference-in-difference and spatial econometrics methods to estimate the impact of urban renewal on neighborhood housing prices. The second objective of this study was to estimate and compare the impact of urban renewal on neighborhood housing prices by dividing the urban renewal process into two phases, with the aim of observing whether expectations prior to the completion of urban renewal can have an impact on housing prices. The empirical results indicated that the influence of urban renewal was found to have already caused a continuous response in terms of neighborhood housing prices even prior to the completion of reconstruction.