Transport accessibility and land value: a case study of Tyne and Wear

This study is concerned with the relationship between transport accessibility and increases in land value, motivated by a desire to inform the land value capture debate. Focusing on residential land, here land value is examined through the form of house prices, using the Tyne and Wear Region of the UK as a case study. In a typical hedonic price model, adopted widely in property studies, the assumptions of multiple regression are observed, where the relationship to be modelled holds everywhere in the study area. However, this is often violated in the analysis of house prices due to the presence of spatial effects. Thus, a relatively new technique, Geographically Weighted Regression (GWR), which addresses the issue of spatial effects (Fotheringham et al. 2002), is employed to examine the relationship between transport accessibility and land value. By embodying spatial coordinates into the traditional global regression model, GWR provides a set of local estimates using a weighted least squares process, where the weights are linked to the distance of the observation to the location of the regression point. This study identifies that the relationship between transport accessibility and land value varies over space. This suggests that a land value capture policy must take into account this lack of homogeneity and that the application of a uniform ‘tax’ would be inappropriate.