EN BLOC SALES AND PROPERTY PRICES: A DIFFERENCE-IN-DIFFERENCES APPROACH

Abstract

This paper examines the effect of en bloc sales on surrounding residential property values. It is among the first to quantify the impact of the en bloc policy from an urban economics perspective, which has to date received insufficient academic attention. En bloc sales refer to the sale of amalgamated parcels of land or collection of units with the intention of redevelopment. It is a form of property-led urban renewal, promoted by the State as a way to encourage private investment and stimulate public involvement. The en bloc sale, and other similar forms of urban renewal practiced internationally, is considered controversial from a legal standpoint. The results from this study are important as it could help urban authorities better justify this policy to the dissenting public in economic terms. In addition, it could indicate if social problems like gentrification, often associated with such urban rejuvenation policies, should be a source of concern for policymakers. A difference-in-differences approach was utilised to overcome endogeneity problems afflicting past contagion studies. Quantile regression is also used to supplement the mean regression. Singapore private housing transaction data between 2003 and 2011 was obtained from the State’s land use and urban planning authority for this research. It is observed that additional en bloc sites in the vicinity contribute to a 0.66% immediate increase in housing prices, but dampens the rate of price appreciation by 0.08% per quarter in the neighbourhood in the long-run. The impact appears to be more acute for landed properties. Quantile coefficient estimates reveal that the willingness to pay to live near an en bloc site is highest above the 70th percentile of the response distribution.