Impact of Metro Network Expansion on Housing Prices near Existing Stations: Evidence from Hangzhou,China

Abstract

Metro system construction has profoundly influenced the Chinese housing market. As metro networks in major cities evolve from single lines to complex multi-line systems, the associated benefits extend beyond station accessibility to enhanced network connectivity. However, the impact of improved metro network connectivity on housing prices has been largely overlooked, leading to a potential underestimation of its economic benefits. Using housing transaction data from 2018 to 2023 during the metro network expansion in Hangzhou, this study employs a hedonic pricing model and the difference-in-differences method to analyze the effects of network expansion on housing prices around existing stations. The results show that metro network expansion significantly enhances connectivity and increases housing prices within 0.5 km of existing stations by an average of 2.42%. The findings also reveal heterogeneity in these effects. Geographically, the premium effect in non-central urban areas (1.67%) slightly exceeds that in central urban areas (1.56%), and areas with higher station density benefit more from network expansion. The degree of network connectivity improvement further shapes these effects, with the highest price premium (2.49%) observed near stations with moderate connectivity improvements, outperforming those with high or minimal connectivity improvements. By highlighting the capitalization effects of metro network expansion, this study provides new insights into how public transportation infrastructure influences housing markets in China.