The Impact of the Metro of Porto on Real Estate Prices: A ReEvaluation

Abstract

Improved accessibility provided by metro transport systems is a subject of interest for academics, underground transport enterprises, public policy designers, and city managers. In particular, gathering empirical evidence that accessibility to underground stations impact on real estate prices brings insight on alternative sources of financing underground transport systems. A previous study for Porto and Matosinhos (Reis, 2011; Reis e Costa, 2011) obtained no empirical evidence of such positive impact. Several years later, it makes sense to study the subject again. To this purpose we estimate hedonic price functions using data for 1065 houses in the Municipality of Porto and Vila Nova de Gaia for the year 2016. In the analysis, we take into account a set of explanatory variables, including structural, location and neighbourhood variables. Three models were estimated: the hedonic price model, the spatially lag model, and the spatial error model. Results point to a positive impact of the proximity of the Metro on housing prices for all models considered.