AN EMPIRICAL STUDY ON THE EFFECTS OF MRT ON PUBLIC HOUSING PRICES IN SINGAPORE: A CASE ON DOWNTOWN LINE 2

Abstract

This paper examines the effects of announcement, construction and opening of the Downtown Line 2 on public housing prices, in specific resale HDB flat prices. With the resale HDB flat transactions from 2000 January to 2016 June, using a hedonic price model, Ordinary Least Squares (OLS) regressions, which form the main empirical strategy, are run to compute the Difference-in-Difference estimates. The results show that the expansion of Downtown Line 2 (DTL2) increased the price of resale HDB flats within 1km and 1.5km of a DTL2 station. Furthermore, results have shown that flats that are within 1km of a DTL2 station warranted a higher premium than those within 1.5km. Forward-looking behaviour seems to be prevalent in this study as the announcement of DTL2 has a positive impact on public housing prices. Construction phase did not deter buyers from buying flats nearby as the price increment surpasses the increment due announcement.