EFFECTS OF OPENING OF THE CIRCLE MRT LINE ON HOUSING VALUES IN SINGAPORE

Abstract

Improved accessibility brought about by the operation of Mass Rapid Transit (MRT) systems is expected to have positive impact on prices of houses located near MRT stations. A new MRT line, known as the Circle Line, is open in Singapore in 2012. Unlike the earlier MRT lines, the new Circle Line is not directly connected to the Central Business District (CBD). The line runs through high-income residential areas where the car ownership rate is high. The economic benefits of being close to the MRT nodes are likely to be relatively smaller for residents in these areas. This study aims to empirically test whether there are significant price changes for private properties before and after the completion of the new MRT Circle Line in 2012 and also differences in price premiums for properties near MRT nodes along the new Circle Line vis-à-vis private properties near the stations on other existing MRT lines. Using differences-in-differences (DID) regression approach to account for omitted variable bias, this research found possibility of indirect effects on developments in other areas not near to Circle Line stations with the opening of Circle Line. In a more targeted analysis on selected projects, the study estimated a premium of 1.6% for every 100m in the Eastern stretch of the Circle Line stations, whereas only 0.3% premium is assessed for the Western stretch of Circle Line that passes through the higher income areas.