IMPACT OF ELDERCARE FACILITIES ON HOUSING PRICES

Abstract

With a rapidly ageing population in Singapore, it is of great importance to provide sufficient eldercare facilities. However, the Not-In-My-Backyard (NIMBY) sentiments against the development of eldercare facilities within the neighbourhoods may be a hinderance. The most common concern cited is the expected decline in property values. Hence, this paper aims to determine the impact of proximity to eldercare facilities on housing prices and explore heterogeneity of the impact by the type of eldercare facilities. These facilities are classified based on the proposed “NIMBY” effect measured in the study. The study also uses an exogenous event, which is an abuse event widely reported in the local news, to test the treatment effects on housing prices located in close proximity to eldercare facilities. Difference-in-differences (DID) and difference-in-difference-in-differences (DDD) frameworks are adopted and estimated using 477,498 HDB resale transactions from January 1997 to July 2017. A treatment zone is set at 1200 metres. Contrary to the perception that proximity to eldercare facilities would be detrimental to property values, the results show otherwise that HDB flats within the treatment zone enjoyed a price premium of 4.0%, after the opening of eldercare facilities. Several reasons could possibly explain the price premium, which include increased convenience, enjoyment of new accompanying amenities, change in perception via the government’s efforts and media outreach in publicizing the benefits and needs for eldercare facilities. In addition, the results also show heterogeneous effects to the opening of different types of eldercare facilities on housing prices. HDB flats within the treatment zone enjoyed a price premium of 1.6% and 1.3% after the opening of “NIMBY2” and “NIMBY3” eldercare facilities respectively. Lastly, HDB flats located within 1000 metres of eldercare facilities enjoyed a price premium of 0.9% after the abuse event was reported on the local media. Hence, it is concluded that the perceived drop in property values due to proximity to eldercare facilities is unfounded.