How does railroad track closure affect housing values? The case of Seoul, Korea

In December 2010, a 6.3 km track segment of the railroad that connects Seoul with Chuncheon was removed because an alternative railroad route was built to accommodate a new faster train. This railroad track segment had long been believed to reduce local housing values because of its disamenities such as noise, shaking, safety problems, and visual intrusion. In this study, we investigate the impact of this railroad track closure on local housing values in Seoul’s housing market. The results from our analysis show that the railroad closure actually increased local housing values. However, even 40 months after the closure, a negative price effect remained because of the sustained stigma of the areas. This study is one of the first to verify the conjecture that ground-level railroad closure actually increases local housing values. Many local governments in the Seoul metropolitan area suggest that converting ground-level railroad tracks into underground railroad tracks is necessary to eliminate disamenities. From the standpoint of the economic benefit valuation of this conversion project, the results from this study can be used to measure the economic benefit in terms of increased local housing prices more accurately. However, the finding that the negative effect sustained even after the closure indicates that it is hard to remove the negative perceptions of former railroad crossing areas. © 2016, Korean Spatial Information Society.