Working Paper Series,
Royal Institute of Technology, Department of Real Estate and Construction Management & Banking and Finance

Abstract: The study aims to measure the occurrence of gentrification and relate gentrification with housing values. For this purpose, we have used Getis-Ord statistics to identify and quantify gentrification in different residential areas in a case study about Stockholm, Sweden. Gentrification will be measured in two dimensions, namely income and population. We analyse the change in these dimensions between 2007 and 2013. In step two, this measure is included in a traditional hedonic pricing model where the intention is to explain housing prices. Prices for 2014-1015 will be used in the hedonic price model. The results indicate that the parameter estimate is statistically significant, suggesting that gentrification contributes to housing values near gentrified neighbourhoods. This possible spillover effect of house prices due to gentrification by income and population was similar in both the hedonic price and treatment effect models. According to our hedonic price model, proximity to the gentrified area increases housing value around 6-8%. The effect of the spillover effect on price distribution seems to be consistent and stable in gentrified areas.

Keywords: Gentrification; Getis-Ord statistics; Housing prices

JEL-codes: R21; R30; Z13

26 pages, December 28, 2020

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