This article presents the use of a spatial difference-in-differences (DID) estimator to measure the impact of new highways on residential property values in mainly rural NE Slovenian municipalities. In the last 15 years, the introduction of two motorways in this region has improved the municipalities’ average accessibility to the highway system by more than one hour. More specifically, in the framework of hedonic price analysis, we use different spatial difference-in-differences model specifications to measure the apartment price rise and the price rise spatial spill-over effect as a result of the introduction of new highways. The comparison of different models’ results shows that the spatial difference-in-differences model specification performs better than the non-spatial hedonic price model. The model results show a positive impact of new highways on average by an almost 11% rise in apartment price, and a limited spatial spill-over effect.

Key words: real estate, highway impact, spatial autocorrelation, difference-in-difference estimator, NE Slovenia