People are willing to pay a premium the shorter the walk to their local train station. Call it the 400-metre rule.
Numerous studies in Australia and overseas have found that properties closer to rail stations attract higher prices than those further away.
“Heavy rail transit uplift is typically shown to be greatest in the 0-400m walking catchment and dissipate with increased distance,” a report by LUTI Consulting found on the impact of train and light rail stations on property prices across Sydney.
The study found properties within 400 metres of a station attracted a 4.5 per cent price premium, compared to properties more than 1.6 kilometres away.
“There is a clear and ongoing trend in Australian capital cities of higher population growth and higher rates of land value growth in the inner areas that are well serviced by transportation infrastructure and that have a higher intensity and mix of land uses,” it found. Conversely, the report found properties within 100 metres of a main road attracted a 7.6 per cent discount.
Another study found that properties within 400 metres of light rail stops along the Gold Coast light rail line enjoyed a 7.1 per cent price premium.
In the case of the new Sydney Metro Northwest Line, a study found residential prices rose 0.037 per cent for every 1 per cent reduction in distance to a Metro station.
For transport and town planners, the phenomenon is called “value uplift”. Defined by the Australian Bureau of Infrastructure, Transport and Regional Economics as “the process whereby the value flows on the transport network are capitalised into land values”.
A BITRE paper noted: “It has been a rule of thumb among planners for decades that people will walk half a mile (800 metres) to a train and a quarter of a mile (400 metres) to a bus. Accordingly, most studies of value uplift for mass transit have used these distances for their catchment areas.”
Transit premium applies worldwide
And it is not just Australia where train stations are boosting surrounding property values.
Research by the UK’s largest building society Nationwide found, using mortgage data, that properties within 500 metres of a railway or Tube station in London attracted a 9.4 per cent price premium. This dropped to a 4.1 per cent premium for properties within 500 to 1000 metres from a station.
A report conducted for Northern California’s Bay Area Rapid Transit (BART) rail network found apartments within 800 metres of a BART station were worth 15 per cent more than apartments more than 8 kilometres from a station. The study found single-family homes attracted an 11 per cent premium base on the same metrics.
“Studies have demonstrated that transit has the greatest positive impact on property values when the transit system significantly improves residents’ access to employment centers and other regional destinations and service is fast, frequent, and reliable,” the report concluded.
A study of the impact of a light rail line on real estate prices in the US city of St Louis found properties within 365 metres of a light rail stop enjoyed premiums of between 4.1 to 7.1 per cent.
In the case of Beijing, it was found properties within 1 kilometre of a subway station attracted a 14 per cent premium.
So take note. Like a park, school catchment area and a good view, the close proximity of a property to a rail station will only enhance its value.