Reconquering the city: a difference-in-differences estimation of the effect of pedestrianisation on the attractiveness of urban areas

In this study I employ a difference-in-differences-type estimation to assess pedestrianisation schemes in Sweden. Pedestrianised areas attract consumers, making them appealing to firms seeking increased sales. As both businesses and residents prefer to locate in these vibrant areas, demand for commercial and residential properties rises. Assuming constant supply, prices are consequently expected to increase. The effects of pedestrianisation on property values remain, however, under-researched. Using three countrywide databases, I compare property prices in treatment areas (where pedestrian street length changed) before and after treatment with a control group. Results show a 2.77 per cent and 9.75 per cent increase in residential and commercial property prices within 0.5km of pedestrian streets for every ten-metre increase. This equals +SEK 869 (EUR 76) and +SEK 980 (EUR 86) per square metre. A ten-metre decrease results in drops of 2.88 per cent and 8.16 per cent (SEK 903 (EUR 79) and SEK 820 (EUR 72)). Effects weaken with distance from pedestrian streets.