IMPACT OF ENVIRONMENT RISK ON RESIDENTIAL PROPERTY VALUES

Abstract

This dissertation examines the impact, if any, of environmental risk on residential property values in Singapore. The study sets out to investigate the relationship between the heavy polluting industrial estates and surrounding residential properties. Perception-based fear of the public has been thought to cause a negative impact on the residential properties proximate to industrial estates. Hence, distance between the industrial area and residential properties is used as the measure of the price effects. Jurong Industrial Estate is taken as the study area. A case study of two property sub-markets, HDB and private housing sub-markets were reviewed. After multiple regression analyses on the recent transactions of both markets were conducted, it was found that proximity to industrial estates does have a negative impact on the residential property values. However, the price-distance relationship is not monotonic. The negative impact is only significant when the properties are situated within a 3km radius for HDB housing sub-market. For private housing sub-market, the negative impact is significant within a 3km radius as well but is inconclusive on where the impact ceases. However, it was found that price-distance relationship is positive when the properties are situated within a 5km radius. The magnitude of the decrease varies for both sub-markets too, ranging from $13039 to $31979.