The Impact of Urban Renewal on Neighborhood Housing Prices in Taipei: An Application of the Difference-in Difference Method
Abstract
This study examined the impact of urban renewal delineation time on housing prices in neighborhoods undergoing urban renewal. More specifically, the study used the difference-in-difference method to assess successful housing transactions in Taipei City from 2008 to 2011. According to the empirical results, before the implementation of urban renewal, the average housing price in the areas that later underwent urban renewal (the treatment group) was lower than that in neighborhoods that did not undergo urban renewal (the control group) by 11,180 NTD. After the urban renewal projects were publicly announced, the price per ping of the control group was increased by 148,800 NTD, while the price per ping of the treatment group was increased by 163,680 NTD. This means that the housing prices per ping in the urban renewal areas were increased by 14,880 NTD more than the housing prices per ping in the areas not affected by urban renewal after the urban renewal projects were publicly announced. This increase, then, indicates the value added after implementation of urban renewal delineation time on houses in the neighborhood. Therefore, research into the impact of urban renewal on housing prices should be concerned not only with the neighborhood factors or time factors of urban renewal delineation. Rather, the two types of factors should be considered at the same time.
Key words Urban renewal；Housing prices；Urban renewal delineation time；Difference in-difference method
- BACKGROUND: URBAN RENEWAL POLICY DEVELOPMENT
Early on, urban renewal in Taiwan mainly included urban land readjustment based on urban area expansion plans which was more common than land rehabilitation. Such an approach that involved urban area redevelopment, but no renewal in old city centers often led to urban sprawl and the decline of city centers (for example, Taichung city center). Therefore, over the recent years, the government has given more consideration to urban renewal. Currently, urban renewal in Taiwan is implemented in accordance with the Urban Renewal Act (URA) promulgated in 1998. However, during the 10 years after the URA was enacted, there were few examples of successful government-driven urban renewal. Successful renewal and rehabilitation projects were mainly those managed by the private sector focusing on land assembly and development. Improvements in a general urban environment were poorly correlated to public interest. Although a series of urban renewal policies, such as the lsquo;lsquo;Speedy Urban Regeneration Project,rsquo;rsquo; were promoted by the Taiwan government starting in 2005, their effects have remained limited.
The URA contains provisions regarding designated urban renewal areas, settlement, and compensation and specifies urban renewal areas for the small but densely populated Taiwan. The URA distinguishes three methods of urban renewal, reconstruction, renovation, and maintenance, which can be managed by public or private parties. In case of public parties, urban renewal of designated areas is implemented in accordance with URA regulations either by the municipal, county, or city authority itself or entrusted to an urban renewal business organization (institution) after a public evaluation and selection process. In case of private implementers, owners of the lands and legal buildings may implement the urban renewal business by themselves or entrust it to an urban renewal business institution for implementation. According to regulations, implementers should include removing and resettlement plans in their urban renewal business plans. As stated by the Urban Redevelopment Office, New Taipei City Government, removing and resettlement methods include in situ and ex situ resettlement and rent subsidies. Removing and resettlement costs are calculated based on the amount coordinated by implementers and tenants.
Benefits of urban renewal include enhanced city appearance, widened streets, improved living environments, safer and more earthquake resistant housing, floor area ratio bonus, reduction of relative taxes, and increased housing prices. While the government promotes many potential advantages of urban renewal for the society, its main purpose is to use urban reconstruction to remove poor urban areas. Moreover, employment opportunities and economic activities brought about by reconstruction work increase the economic and political benefits of urban renewal. However, urban renewal may also have negative effects (Chau and Wong 2014). In Taiwan, urban renewal has damaged the local indigenous cultures and existing social networks, leading to cultural and social disintegration of redeveloped areas. If some tenants are against urban renewal, developers may seek help from public authorities to enforce the demolition of houses. Floor area ratio bonuses of old buildings allow to build high houses, while decreasing the land area. This benefits builders but violates tenantsrsquo; right to enjoy sunshine.
- OBJECTIVES OF THE STUDY：
For the purposes of successful urban growth and development in the twenty-first century, in addition to improvements in construction and the promotion of economic development, more complete and effective use of land itself is required. The implementation of urban renewal is one of the important factors in the effective use of urban land. The fundamental goal of urban renewal is to carry out reconstruction, refurbishment, and maintenance in the context of urban planning to promote the sustainable use of the overall environment and to improve environmental quality and quality of life. Urban renewal itself consists of the replanning and re-designing of older urban areas for more efficient use while simultaneously bri
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