Alanna Gallagher has a piece on the impact of the Luas on house prices in today’s Times. It’s a mix of facts and anecdotes that reminds us of some of the positive effects of proper public transport in a city. At the same time, the fact that people are willing to pay a hefty premium for being near a Luas station reflects badly on transport options in the rest of Dublin.
24 replies on “The value of public transport”
I’d take as more of a reflection of people’s perception of public transport. A neighbour of mine was selling his house, and the estate agent advised against using proximity to the 46a as a selling point, even though it’s arguably the best bus route in the country, and as regular as any route should be.
The Luas is sexier and sleeker than a bus: people still have a hang up about using the bus, even where good networks exist.
rail commands a premium
” quality bus” is ,for better or for worse, seen as an oxymoron
in fairness she also mentions how proximity to luas stops on the red line is a negative for sellers.
I wonder how the opening of the Dunboyne and Midleton railways impacted on property prices in the respective areas?
The very title of the piece “Will Luas extension lift south county prices?” demonstrates how people still haven’t let go of the property mania. Anything and everything is measured by the effect it has on property prices. The bottom is still far away according to this indicator.
Surely land prices are more relevant than property prices?
If land prices increase, we have more apartments, so lower average property values.
@Pidge
Great song though – let’s not mess with the 46a (-;
@Garo
Spot on
*supresses urge to start rant*
Didn’t business post run this last Sunday?
@Garo
The Irish Times property journos are shameless. They have spent the last 3 years calling a bottom to the market.
@ Seafoid: “The Irish Times property journos are shameless” – or clueless.
Actually advising potential buyers to purchase res prop at this time is quite disgraceful. Its the ‘bottom’ for mortgage interest rates! When these get off their arse and start rising, res prop prices will rise/fall? Yep, I thought so!
Brian P
Most of the reactions to this piece are OTT. The article makes it clear from its references to the ESRI study that the “Luas effect” is about relative house prices in terms of distance from Luas stops. The absolute level of house prices is another matter.
There was one interesting point in the article made by someone in the estate agent business, to the effect that any Luas premium should have already been incorporated into house prices: you don’t have to wait for the thing to open to get an effect. For once a perfectly sensible point coming from an unlikely source.
There might be a connection between falling house prices and the Luas premium however. If the premium reflects the expected level of economic benefit from better public transport, should this be a larger in percentage terms, when the general level of house prices is lower?
@John Sheehan
We did not explicitly test for this, but cursory inspection of the regression results suggests that the Luas effect is proportional to the house price.
Would have thought Cherrywood and much of greenline extension get a property boost from proximity to both Luas and upgraded M50. Airport for example is now 20mins by car but by public transport at least an hour?
@ Richard,
Just on a slight aside point, there is also costs to living close to a luas / public infrastructure facility.
Some housing estates close to the a luas stop have to employ a private car clamping agency to patrol their estates. Other members of the public tend to use parking spaces in housing estates close to a luas stop. Hence people living in these areas have difficulty with double parking. It also adds a safety risk for children living in the estate.
There is a strong element of truth that the asset value rise was already factored in before the Luas arrived. But this would have been true for more recent properties.
If there is capital gains tax there should be a capital loss rebate
They also have to pay alevy for the thing if it’s a new property.
I wonder what the effect of the proposed Metro North project might be, both in the short and long term.
@Holbrook Fields – I have looked at this in this ESRI working paper I wrote over a year ago,
http://www.esri.ie/UserFiles/publications/20090609142934/WP301.pdf
where I apply two alternative methodologies to cost-benefit analysis to test whether Metro-North is worth doing. On the basis of residential property value gain it is not!
There is an implicit assumption in the paper that property values elsewhere do not drop, which is clearly optimistic in a market with excess supply but reasonable if there is excess demand. I did not incorporate commercial property, which is valid if there is perfect displacement (John Sheehan is absolutely right to refer to the relative impact – it is easy only to count the positive impacts and to forget about the negative ones. It is also important to keep in mind the cost of putting in LUAS or Metro which is not small).
@Sporthog
We find that house prices fall very close to publicly accessible beaches, presumably for the reasons that you describe. We find no such thing for Luas stops.
@Edgar
Thank you very much for posting the link to your working paper. I had a quick read of the Conclusions section, my interpretation of that section is that we can’t be sure if it is a good or bad idea to proceed with Metro North and that we need more published analysis of infrastructure projects. Thanks again for posting the link.
what should be highlighted is that private gains are made from public expenditure and as a society we never successfully recapture that via a site value tax.
because of the current system, anybody who wants to develop anything along the line is hit with a massive development levy to fund the luas, but that prevents development of existing buildings or upgrading and unfairly makes them carry the cost while those who do nothing have no cost but receive the uplift in property prices.
it creates a perverse set of incentives and stops good behaviour (upgrading) while rewarding those who do nothing.
To coin a phrase; Prediction is very difficult, especially about the future.
considering that the life span of a metro project is decades (if not centuries), can we really make a useful assessment of how well it will turn out at all.
“The value of public transport”//
is that it is valuable and we can make essential money by selling it if we have to..
That’s a very interesting paper Edgar – I’m always delighted to see people using proper GIS analysis of available data to cut to the chase.
In terms of the cost-benefit analysis has the impact of increased stamp duties on properties along the corridor been factored in?
Luas extension was factored into the value of property prices long before the final decision was made to extend the line. Agents and sellers had it in brochures as a key selling point.
In my opinion, the opening of the line will not help increase prices because it has already been factored in, what it might do is help peripheral properties slightly more saleable.
The Luas line goes through areas that had rapid price increases and now have been obliterated.
Lets be honest, some spots on the route as close to being ar$e end of nowhere.