eThesis - School of Business electronic theses

PURPOSE OF THE STUDY

The purpose of this study is to determine whether West Metro has had an effect on apartment prices in the Helsinki Metropolitan Area (HMA). I also investigate that has the price effect varied for housing on areas with increasing travel time to Helsinki Central Business District and for areas with varying social status.

DATA

The housing transaction data set consists of residential apartment transactions done by Finnish real estate agents in the HMA during January 2005 - September 2010. Total number of transactions in the sample is 46,426. The final sample for the West Metro estimation includes 4,149 transactions. The demographic data of the residential areas is obtained from the statistical center of the Helsinki region. Location coordinates of the housing transactions have been obtained from the Google Maps service using a Java interface.

RESULTS

Findings of the study show that, adjusting for the general appreciation in the HMA, on average housing prices have risen close to the West Metro stations after the metro building decision. However, apartments in immediate proximity of the coming West Metro stations are on average cheaper than housing farther away from the metro stations. However, the estimations done for individual West Metro stations show that the metro’s effect on apartment prices varies between station areas.

The impact of increasing travel time to Helsinki Central Business District (CBD) increases prices of apartments closest to metro. While in general the impact of increasing travel time to CBD on housing prices is negative. High status neighborhoods suffer more from negative price impact caused by living in short distance to a coming West Metro station.

The announcement of the West Metro building decision and the beginning of the construction works have increased the amount of housing transactions and reduced the average selling time of apartments close to West Metro stations.