High-tech plant entry and local house prices: Evidence from Japan

Understanding how large firm entry reshapes local housing markets is crucial for evaluating place-based development strategies in regional science. This study investigates the housing market response to Taiwan Semiconductor Manufacturing Company (TSMC)’s decision to build a semiconductor fabrication plant in Kumamoto Prefecture, a peripheral region of Japan. Drawing on transaction-level data for detached-house sales, we estimate that residential property prices in the treatment location rose by about 16.6% within two years of the announcement, relative to control group. A series of robustness checks, including additional covariates, tests for spatial spillovers and anticipatory effects, and a matching-based specification, confirms the robustness of the estimates. The results speak directly to regional policy debates. While mega-plant investments can boost economic activity, they simultaneously intensify housing affordability pressures for incumbents. Our findings highlight a fundamental trade-off at the heart of contemporary regional development strategies between attracting high-tech investment and maintaining inclusive, affordable local housing markets.