What's Access Worth? A Hedonic Pricing Approach to Valuing Cities

Abstract

Access, or the ease of reaching destinations, influences property values. Most studies investigating the relationship between the two either confuse access for proximity, or measure accessibilities in ways that make interpreting elasticities difficult. We specify, and estimate, a hedonic pricing model for house sales in the Sydney region where access by auto and transit are measured as the cumulative number of jobs (opportunities) reachable within a determined time threshold, here 45 minutes. The model was set up with structural, and neighborhood attributes in addition to the access measures, and resulted in a statistically significant fit. The results indicate a greater influence of transit access on house prices compared with auto access. Although a synergy would play out in reality, a unit increase in jobs reachable within 45 minutes by transit was estimated to increase sale price by more than six times than auto. We also demonstrated the impact of improving access on the value of postal code areas. Although the results are specific to the Sydney region, the method can be adapted to any region to estimate elasticities of sale price with respect to access.