Investigating the impact of recession on transportation cost capitalization: A spatial analysis

The unprecedented economic crisis experienced by Greece is fertile ground for research at myriad levels. In this paper, the authors aim to investigate the effects of the crisis on real estate prices by measuring the impact of transportation infrastructure location. For the purposes of this research, on-line real estate data collected in 2011, when the consequences of the crisis were still uncertain, and in 2013, when a significant decline had been observed, are combined. The analysis is based on various spatial statistical methods. In order to identify potential common price patterns, G spatial clustering is first performed. Spatial error models (SEM) are then developed to parameterize the real estate prices. The results show that, overall, purchase prices have been reduced by 18.2% and rents by 15.2%. More specifically, the positive impact of metro station locations (<500. m) has declined 42.5% for purchase prices and 62.5% for rents. Moreover, dwellings located in the Inner Ring are still more expensive than others; however, the impact of the crisis has been reduced by 30.3% for purchases and 50.7% for rents. On the other hand, the negative impact of ISAP station locations (<500. m) has declined by 53.5% for purchase prices. The findings of this paper could be of great interest to the transportation policy research community and could be used to better predict the benefits and costs of public transport investment under extremely uncertain conditions, such as a long-lasting recession.