Capitalización anticipada del metro de santiago en el precio de las viviendas

In general, the market price of a house with good access to the main labor and commercial markets in a city is higher than similar houses with worse access. The reason is that transportation costs are lower in the former compared with the latter. For this reason, investments in public transportation, like a new subway line, are capitalized on housing prices. In this work, we empirically estimate the degree of capitalization of the new line 4 of the Santiago subway in Chile. Specifically, we estimate the anticipated degree of capitalization after the construction of the new line was announced and after the exact location of the stations was known. Using a unique dataset, which contains all housing transactions occurred in Santiago during the period between December 2000 and March 2004, we estimate the impact of the new line of the subway of housing prices. The results show an average increase between 3.3% and 4.4% after the construction announcement and an increase between 4.5% and 5.7% after the exact location of the stations was announced. This increase is not evenly spread, it depends negatively on the distance to the closest station. An indirect effect of the housing capitalization is that tax property revenues would increase if the tax authority reassess the property values accordingly. This effect is not negligible and could represent between 14% and 20% of the new subway line total investment, which opens an interesting discussion about the way in which expansion of the subway network could be financed.