The MRT system provides convenient transportation for traveling in the city. Due to
traffic congestion and the difficulty of finding a parking space in urban areas, the distance
to the MRT station has become a key determinant of property values in the city. Bajic
(1983) identified the impact of a subway line in Toronto on the housing prices. The result
showed that the direct savings in commuting from taking the subway should have been
reflected in the housing values. The average amount of savings is estimated to be around
$ US 2,273.
Coffam and Gregson (1998) estimated the impact of the railway on land prices in Knox
County, Illinois. The empirical results suggest that the value of lands increases when the
lands are closer to railroads. The value of lands closer to the railroads is 9% higher than
those that are not. Bowes and Ihlanfeldt (2001) found that proximity to the railroad station,
business activities and crime rates in the neighborhood, affect property values
significantly.
McMillan and McDonald (2004) examined the impact of the completion of rapid transit
line from downtown Chicago to Midway Airport on the prices of single-family houses.
The results show that housing prices are affected by the proximity to subway stations.
The increase in the value of real estate that is close to the transit point is $216 million
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compared with the real estate far away from transit station between 1986 and 1999.
Armstrong and Rodriguez (2006) suggested that housing prices are 9.6% to 10.1%
higher when residential properties are located within 0.5 miles of the station in Eastern
Massachusetts. In addition, the property values decrease 1.6% for every additional minute
of driving to the railroad station. Dewee (1976) showed that housing prices in Toronto
decrease when the distance to the subway stations increases and distance is one-third of
a mile from the stations.
Debrezion et al. (2007) found that the effects of railway stations on the values of the
commercial property are limited to short distances from the stations. In their study, there
are two different effects to estimate the railway station proximity. The first one is local
station effect, which measures the effect of distance within 0.25 mile from the station.
The second one is the global station effect that measures the effect of coming 250 meters
to the stations.
The empirical results showed that within 0.25 mile from the station, the residential
property value is 12.2% less expensive than commercial property. However, they also
found that at longer distances the effect on residential property values dominates. The
estimates suggested that the value of the residential property is 2.3% higher than that of
the commercial property when moving250 meters closer to the station.
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Damm et al. (1980) used data from Washington Metro and found that property values
are negatively related to the distance to the station. When the distance to a station
increases by 0.1 miles, the rent of an apartment will fall by 2.5% in Washington D.C.
(Benjamin and Sirmans, 1996). Kilpatrick et al. (2007) examine the impact of transit
corridor on the housing prices and the result reveals that proximity to the transit corridor
alone without direct access has negative impact on nearby housing prices
Chernobai et al. (2011) used Spline Regression to estimate the effect of highway on
housing prices in Los Angeles. They found that housing prices show a convex relationship
to the distance to highway. Waddell et al. (1993) also showed that the relationship between
housing prices and the distance of the station is U shape. They used a nonlinear model to
estimate the effect of the distance to the station on land value. The locations of MRT
stations have a different impact on land value. For instance, in downtown Chicago, the
17% increase in the values of residential lands within 1.5 miles from the station can be
attributed to the transit. (McDonald and Osuji, 1995).
In Taiwan, previous studies have shown that MRT system has a significant effect on
housing prices. Peng et al. (2009) examined the effect of the completion of Taipei MRT
Red Line on housing prices. The results revealed that the values of houses adjacent to
MRT stations increase by NT$440,000.
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Hong and Lin (1999) estimated the impact of Taipei MRT system and the road width
on housing prices in Taipei. They found that the road width does have a positive effect on
housing prices. Moreover, housing prices increase significantly in the area close to the
MRT stations. More importantly, the relationship between housing prices and the distance
to MRT station is convex.
Tai (2011) also use Taipei MRT System to show that the price effect of MRT station is
nonlinear. Meanwhile, the impact of MRT station is not the same in each distance interval.
Also, there are differences between urban and suburb area. The result showed that the
distance to MRT is station is within 300 meters, the impact on housing prices is more
statistically significant. Moreover, the results also showed that the closer the property lies
within the suburb area, the greater the effect to the housing prices is.
Feng et al. (1994) indicated that the distance to MRT station has a greater effect on
housing prices in downtown. Housing prices in the central business district usually
increase more than the housing price in the outskirt of the central business district and
suburban area. In addition, the increase in the value of land for commercial and office
purpose is greater than that for residential use.