Transport accessibility significantly increases the price of dwelling

Each new public transport line in a district increases the price of an apartment by 1%, as it was found out by Aleksandra Sidorovykh, the member of Scientific training laboratory for interdisciplinary empirical studies of NRU HSE-Perm.

The price of residential real estate consists of different components: location, characteristics of a block and an apartment, infrastructure and transport accessibility. However it often proves to be very difficult to assess the extent of influence of each factor. At the same time such assessment can be very useful for real estate market specialists at the development of building projects and for local government officers who regulate the processes of territorial organization in the city.

Aleksandra Sidorovykh, the member of Scientific training group “Empirical demand assessment” of Scientific training laboratory for interdisciplinary empirical studies of NRU HSE-Perm, decided to find out what factors influence the prices of residential real estate in the city of Perm, including how great is the influence of the transport accessibility factor.

The study was based on the analysis of advertisements about the sale of 169 apartments in March 2014, which included address, price, total space, number of rooms, floor, number of floors, material and the plan of a house in which the apartment was located, social infrastructure data. The distance from a certain house to the nearest public transport stop was calculated with the help of Yandex.Maps service.

The extent of influence of different factors on the price of real estate was found with the help of hedonic model of pricing.

The results of the study were published in the article “The assessment of influence of transport accessibility on real estate prices” in The Applied Econometrics journal #37 (1), 2015.

The more transport, the more expensive is dwelling

As the study showed, the space of apartment, the fact of its location on the ground floor and the number of public transport lines in a district and the time spent to get to downtown have the biggest influence on the price of dwelling in Perm.

Ms. Sidorovykh found out that every new line gives an increase in the price of apartment in average by 24 thousand rubles (0.7-1% of price). However, the time needed to get to downtown, negatively influences the price of apartments: the increase of a trip by each ten minutes will cost about 5% from the price. 

At the same time the distance to the public transport stop was an insignificant factor at forming the price of apartment. The author of the study explained it by the fact that many small stops fell into the sampling, the proximity to which does not mean good transport accessibility. “It is also possible that sampling often included those people who have their own car, that is, the availability of public transport stop near the house is not important to them” – noted Ms. Sidorovykh.
Among the characteristics of apartment only the space and the fact of location on the ground floor were significant. With the increase of apartment space the price of a square meter falls. The location of an apartment on the ground floor also influences its price negatively.