Transport Infrastructure and House Prices in the Long Run

Abstract We examine the effects of transport infrastructure on house prices in the OECD countries over the period 1870 to 2016. We employ both parametric and non-parametric panel data techniques that account for the non-linear and time-varying relationship between transport infrastructure and house prices. Our parametric results, which are based on newly developed panel data models that incorporate interactive fixed effects, suggest that transport infrastructure is positively associated with house prices. The non-parametric estimates suggest a time-varying relationship and that the average positive effect of transport infrastructure has been the case for most of the period we study. We also examine three channels through which transport infrastructure could influence house prices – economic growth, employment, and crime – and find that economic growth is a mechanism through which transport infrastructure transmits to house prices.