Congestion pricing could boost home values

But outer-borough neighborhoods could take a hit

New York /
May.May 02, 2019 10:00 AM
A study in London found that congestion pricing raised the home values in the zone by 3 percent (Credit: iStock)

A study in London found that congestion pricing raised the home values in the zone by 3 percent (Credit: iStock)

Not only will congestion pricing make driving in the city more expensive, but it may raise the prices of homes, too.

Research suggests the move — which was aimed at easing traffic and raising revenue for the subway system — may boost residential real estate values in the pricing zone, the Wall Street Journal reported.

“You would expect house prices to increase because you have much less traffic around your house after the congestion charge,” said Cheng Keat Tang, a postdoctoral researcher at the University of Southern California.

In a working paper published last year, Tang examined the effect of London’s congestion pricing plan (which went into effect in 2003) on traffic and residential real estate prices. The research found that that congestion pricing raised the home values in the zone by 3 percent, which, Tang said, equates to “a windfall of more than £10 billion [$13 billion] for homeowners.”

Mark Chin, managing director of Keller Williams Tribeca, said he expected housing prices in outer-borough neighborhoods with poor public-transit access to take a hit because residents will face higher commuting costs. Plus, the expected increased traffic could depress prices in areas just outside the zone.

“If I were looking at real estate in the 60s, I would be thinking [the pricing plan] could have a slightly negative impact,” he said.

Meanwhile, commercial real estate may see a dip. Per a 2015 study, Singapore’s congestion pricing led to a 19 percent decline in retail real estate within the pricing zone. Researchers found the charge at “no significant impact” on residential real estate. [WSJ] — Meenal Vamburkar


Related Articles

arrow_forward_ios
Vanke US managing director Kai-yan Lee, RFR’s Aby Rosen and 100 East 53rd Street (Photos via Foster + Partners and Getty)

Vanke seeks to remove RFR from Midtown condo project

Vanke seeks to remove RFR from Midtown condo project
Hippo founders Assaf Wand and Eyal Navon (LinkedIn)

Home insurance startup Hippo raises $350M

Home insurance startup Hippo raises $350M
Prices increased 6.6 percent year-over-year in September (iStock)

US home prices surged 6.6% in September

US home prices surged 6.6% in September
From left: Edison Properties CEO Robert Selsam, Ironstate Development's Michael Barry, Stellar Management founder Larry Gluck (LinkedIn; Gluck Family Foundation)

These developers could benefit the most from Soho’s rezoning

These developers could benefit the most from Soho’s rezoning
176 North 6th Street and 16 South Portland Avenue in Brooklyn (StreetEasy; Google Maps)

Brooklyn luxury market surges with nearly $73M in contracts

Brooklyn luxury market surges with nearly $73M in contracts
1045 Madison Avenue and 300 Central Park West (The Benson; Wikipedia Commons)

Manhattan luxury market shows signs of progress with 25 deals

Manhattan luxury market shows signs of progress with 25 deals
TikTok's biggest stars include (from left) Bryce Hall, Griffin Johnson, Addison Rae, Charli D'Amelio and Dixie D’Amelio (Getty)

Firm that manages TikTok party houses goes public

Firm that manages TikTok party houses goes public
RMBS then and now: Do securitized home loans still matter?

RMBS then and now: Do securitized home loans still matter?

RMBS then and now: Do securitized home loans still matter?
arrow_forward_ios

The Deal's newsletters give you the latest scoops, fresh headlines, marketing data, and things to know within the industry.

Loading...