The Impact of Enhanced School Zone Safety Regulations on Housing Prices: Evidence from Seoul Apartment Market

• In Event: Local Transportation Policies

Abstract

Safety regulations in school zones often face a trade-off between protecting children and creating neighborhood inconveniences. Based on Perry's Neighborhood Unit theory and its emphasis on the centrality of elementary schools in residential planning, we investigate whether safety regulations reshape the relationship between school proximity and housing prices in Seoul, South Korea. Our study focuses on "Minsik's Law," a 2020 policy that strengthened traffic safety measures around elementary schools through strict speed limits and enhanced penalties for violations. Using a continuous difference-in-differences design with hedonic pricing models, we compare quarterly apartment prices within 400m of elementary schools (treatment group) to those beyond this radius (control group) from 2015 to 2024. 
Our event study reveals three key findings. First, prior to the regulation, we could not reject the null hypothesis as the 95% confidence intervals all contained zero, supporting the parallel trends assumption. Second, immediately after the regulation's implementation, treatment group apartments experienced a statistically significant price premium, suggesting that safety improvements were valued more than potential inconveniences. Third, this premium gradually diminished over time, returning to pre-regulation levels after approximately two years.
These findings have important implications in terms of social equity and policy formation. The initial price premium suggests that safety regulations can create a form of "gated community" effect, where wealthier residents benefit from enhanced safety measures while potentially exacerbating housing inequality. This effect is particularly relevant in Korean premium apartment complexes that are built around elementary schools, which aligns with critiques of Perry's Neighborhood Unit theory regarding the creation of socially exclusive residential areas.
Furthermore, the temporary nature of the price effect indicates that the initial market response reflected the regulatory shock. Given that these safety regulations were implemented following a tragic child death that garnered significant public attention, the immediate price increase may have been driven by investment activities from wealthier households. This suggests that policymakers need to carefully consider not only the direct safety benefits but also their potential to create speculative market dynamics and reinforce socioeconomic disparities.

Author

• Sunyoung Cho, University of Pennsylvania
  Presenting Author