THE IMPACT OF PETROL STATIONS ON HDB RESALE PRICES

Abstract

In many cities around the world, petrol stations are often situated in dense residential areas to provide convenience and accessibility to motorists who need refuelling services. Therein lies the problem. While petrol stations are an essential part of urban infrastructure, it does bring about externalities – such as air, noise, and soil pollution as well as pose significant fire and explosion risks – which can affect nearby housing prices adversely. Thus, this research seeks to quantify the impact of petrol stations on housing prices in close proximity. The objectives of this paper are to; investigate the relationship between a HDB residential unit’s distance from a petrol station and its price, and, analyse the impact of the development of a petrol station on the prices of HDB residential units in close proximity. Two statistical hypothesis tests were conducted to achieve these.

In test one, a spatial variations multivariate regression analysis of 6,610 HDB resale transactions determined that HDB residential units that are within 100 metres of a petrol station faced a price discount of 2.1%, while units that are within 100 to 200 metres faced a price discount of 1.2%.

In test two, a DID regression analysis of 10,022 HDB resale transactions found that HDB residential units located within 200 metres of a petrol station site faced a price discount of 7.9% upon the completion of the petrol station. When a robustness test was conducted, repeating the test but using different radiuses and datasets, similar results were achieved, suggesting that initial results were robust.

Based on the findings, petrol stations can be considered as a disamenity to HDB residential units in Singapore.