Estimating the Influence of Land Use Changes and Accessibility to Central Business Areas on property price in the Tokyo Metropolitan Area

Author Name KUTSUZAWA Ryuji (Consulting Fellow, RIETI)
Creation Date/NO. May 2020 20-J-028
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This paper attempts to estimate the influence on property prices of land use, including commercial, residential or other, earthquake hazard level and commuting distance to work, by employing the repeated sales method using transaction price data for apartments in Tokyo.

In Japan, the influence of land use and commuting distance (accessibility) on property price is typically estimated using the hedonic method, but it is criticized that the estimation tends to be biased due to omitted variables. The time-changing effects of the land use and commuting distance could be estimated more appropriately using the repeated sales method which only analyzes multiple dealings of properties on the presumption of properly coping with the problems of sample selection bias.

I adopted the repeated sales method with two-step Heckman's analysis to solve the problem of sample selection bias and estimate the time-changing effect of land use and commuting distance on the apartment prices and show that property price is positively influenced by increased commercial land use, reduction of earthquake hazard level and commuting distance index to business areas. Accessibility to the central business area (CBA), the influence of the land use changes and the reduction of earthquake hazard risk on economic activity should be analyzed further using the repeated sales method.