Old is gold: A study of the impact of young town development on the price premium of mature towns

Abstract

This research paper posits a disparity in the accessibility to public amenities across mature, middle-aged and young towns. Such a difference is attributed to the various generations of town planning. Towns developed in the early years are more likely to be equipped with amenities as the population increased over time. In contrast, young towns are still in their conceptualisation and growing phase. Thus, there are inherent differences in the built environment between mature and young towns. Amenities are essential elements in every community as they play an important role in enhancing residents’ quality of living. They are avenues for social interaction amongst residents which create a sense of identity within the locality. More importantly, town maturity has an influence on property values. In this study, we examine the relationship between town maturity, the age of property and housing values. The data spans across a period of 10 years and 11 months to track the changes in amenities and HDB resale property prices. Results found that mature towns generally have a higher count of amenities which directly translates to higher property values. It is also noted that premiums for mature towns have increased despite much effort to develop young towns. In addition, we observe lower levels of price discount on age for estates in mature towns. Young towns experience higher levels of price discount after meeting the minimum occupation period. The observation is seen to be consistent throughout all ages. This captures homebuyers’ perception of various town maturities and how it influences their willingness to pay.