CORDON ROAD PRICING AND CONDOMINIUM VALUES

Abstract

Singapore is the first country to implement a comprehensive cordon road pricing systems as a tool for congestion management. As in most transportation improvements, consequent changes in the internal structure of the city are predicted. Studies have shown that residents within the Restricted Zone (RZ) reap positive externalities - smoother traffic, lower air and noise pollution - at the expense of road users living outside the RZ who needs to pay for entrance into the CBD. On the other hand, RZ residents can avoid crossing the gantries since they can conduct most activities (e.g. work, play, shopping etc) within the CBD area. As such, it is intuitive that housing units within the RZ are especially desirable to car-owners. This study examines whether the values of condominiums located within the RZ are significantly higher than those located outside. A hedonic price model was formulated and stepwise regression analyses were carried out on transaction data from two time periods. It was found that location within the Restricted Zone has significant positive price impacts on condominiums, whether under the ERP or the ALS. However the price premium derived from the hedonic model was much larger than the discounted value of road pricing savings that can be derived from residing within the RZ. This implies that positive externalities have also been quantified to give the additional premium amount.