Still prefer, but not that much: the premium of subway access on house prices during the COVID-19 pandemic period

ABSTRACT

Rail access has traditionally been considered a factor that enhances the amenity value of urban areas, resulting in a price premium for properties located near these stations. However, the Covid-19 pandemic has exerted a profound influence on people's mobility patterns and travel behavior within urban areas. One of the most conspicuous changes is a substantial decrease in subway ridership. This study investigates whether the decline in public transit ridership has led to shifts in housing location preferences driven by proximity to rail access during the Covid-19 pandemic. This study focuses on assessing the impact of the pandemic on the premium associated with rail access in relation to house prices. Using approximately 180,000 apartment transaction records from Seoul, South Korea, the empirical findings, based on a difference-in-differences approach, reveal an immediate and significant depreciation effect resulting from this exogenous shock during the 25-month pandemic period. The premium decreases significantly within a 1.2-kilometer radius from a subway station, and this reduction exhibits a distance-decay pattern within the designated area.

Highlights

• Traditional amenity value of rail access challenged by Covid-19.

• Profound decline in subway ridership during pandemic.

• Investigation into pandemic's impact on housing location preferences.

• Assessment of pandemic's effect on rail access premium.

• Immediate and significant depreciation effect within 1.2 km from subway stations.

KEYWORDS:

• Subway access
• COVID-19 pandemic
• subway ridership
• house price
• difference-in-differences

Disclosure statement

No potential conflict of interest was reported by the author(s).

Notes

1 The maximum distance between a house and the nearest station in the data used for this study.

2 The study area and scope may be relatively compact when compared to other metropolitan areas examined in existing studies. However, it is important to note that the Seoul housing market is characterized by its high population density and the dense concentration of apartments around subway stations. The measurement ensures reasonably well populated with a large number of housing transaction and even number of observations within each distance ring. Considering these distinctive market characteristics, the application of this measurement appears suitable and yields significant and reliable empirical results.

3 The selection of the date is predicated on the immediate and most pronounced decline in subway ridership following the initial announcement, as clearly illustrated in Figure 1.

4 Housing Census 2020, Statistics Korea.

5 The results for other variables are not included in the paper, but available upon request.

6 During the pandemic period, ridership decreased by an average of about 30% in the top 10% of stations and 15% in the bottom 10% of stations relative to the pre-pandemic period.