Transportation infrastructure improvement and real estate value: impact of level crossing removal project on housing prices

This paper studies the impact of removing the level crossing, which constitutes traffic hazard to the society, on house prices by conducting a quasi-natural experiment using the Level Crossing Removal Project (LXRP) implemented by the Victoria state government in Australia since 2015. Using a difference-in-differences method, we analyzed the changes in housing prices due to the improvement of transportation infrastructure, gauging the LXRP’s impact on house and unit submarkets separately. We found that the prices for house and unit markets increased significantly after the removal of level crossings, with the value uplift decreasing with distance from the removal site. This paper contributes to the existing literature by adding an empirical study related to the enhancement of infrastructure aiming to improve the traffic safety in the urban context. Unlike previous studies, this study examines the effect of improvement projects for existing infrastructure and provides relevant implications to improve the efficiency of investing public resources in infrastructure improvement.