THE SPILLOVER EFFECTS OF NEW PUBLIC HOUSING DEVELOPMENTS ON NEIGHBOURING RESALE PRICES

Abstract

The subject of spillover effects of housing developments in Singapore has a limited store of literature which are contextualised in the private housing market. Thus, this paper seeks to investigate the spillover effects and impact of new public housing projects (Build-to-Order or BTO) on neighbouring Housing Development Board (HDB) flat prices. A difference in difference (DID) approach is employed together with a hedonic regression model to investigate the spillover effects of new public housing developments, tracking three events: the announcement, physical completion and when the BTO flats are traded on the resale market. These effects are hypothesised to have an impact on the neighbouring resale prices due to the positive externality of added amenities as well as the negative externality of added supply and competition to the neighbourhood. Four pairs of treatment and control groups are identified across both mature and non-mature towns; a total of 12 DID regressions performed for each pair and event studied. Treatment groups are defined as existing HDB flats with at least one new BTO project in its 500 metre radius. The results reveal that there is no significant announcement effect on nearby housing prices, an overall significant positive effect due to the TOP effect and an overall significant positive effect on nearby housing prices when the BTO project has been added to the supply of resale flats. Given evidence of spillover impacts of new public housing developments on the neighbourhood, this topic should be expanded on, with suggestions for future research in the conclusion.