Scandinavian Working Papers in Economics

Working Paper Series,
Royal Institute of Technology, Department of Real Estate and Construction Management & Centre for Banking and Finance (cefin)

No 16/2: NIMBYs for the rich and YIMBYs for the poor: Analyzing the property price effects of infill development

Fredrik Brunes (), Cecilia Hermansson (), Han-Suck Song () and Mats Wilhelmsson ()
Additional contact information
Fredrik Brunes: Department of Real Estate and Construction Management, Royal Institute of Technology, Postal: Brinellvägen 1, 100 44 Stockholm, Sweden
Cecilia Hermansson: Centre for Banking and Finance, Royal Institute of Technology, Postal: Brinellvägen 1, 100 44 Stockholm, Sweden
Han-Suck Song: Department of Real Estate and Construction Management, Royal Institute of Technology, Postal: Brinellvägen 1, 100 44 Stockholm, Sweden
Mats Wilhelmsson: Department of Real Estate and Construction Management, Royal Institute of Technology, Postal: Brinellvägen 1, 100 44 Stockholm, Sweden

Abstract: A combination of strong urbanization and shortage of land in many European city areas prompts an impetus of infill development, with current residents often raising concerns that infill development leads to lower nearby property prices. The aim of this paper is to analyze how nearby property prices are affected by new construction projects in Stockholm, Sweden. We use a difference-in-difference specification in a hedonic model, and our sample consists of more than 40,000 observations over the period 2005–2013. Our results are robust and indicate that house prices in nearby areas increase following the completion of infill development. Our results also indicate that infill development only has a positive spillover effect on nearby house prices only in areas with lower incomes, more public housing units and more inhabitants born abroad.

Keywords: Residential construction; Infill development; NIMBY; YIMBY

JEL-codes: R10; R30

41 pages, February 22, 2016

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