THE DETERMINANTS OF SINGAPORE CONDOMINIUM PRICES : WHETHER COMMUTING BY MRT OR BY DRIVING MATTERS

Abstract

Rising property prices in times of economic downturn have raised the eyebrows of many people. It has become unclear what really drives the prices of properties in Singapore. Rising bids for certificate of entitlement for cars is also a concern for many. On the other hand, the Mass Rapid Transport (MRT) system is very well developed and can replace cars as an alternative mode of transport with much lower costs. This paper seeks to understand the attitude of condominium buyers on their transportation modes and finds out whether would-be home buyers value commuting time to CBD by MRT and by driving differently. The outcome has implications to the development of future infrastructure policies.

Literature suggests that while there are many methodologies created for analysing housing prices, hedonic regression method remains one of the more convenient and versatile method. This is because a hedonic regression model can explain variables that vary over time as well as explain variables along the vertical dimension, while methods such as Geo-Statistical methods are unable to explain variables along the vertical dimension. There have also been many researches done on both price-trend factors and hedonic factors that lead to better hedonic models with strong explanatory powers.

Three separate linear regressions are run in this paper with the conclusion that would-be home buyers value commuting time to CBD by MRT more. The paper recommends that the relevant authorities investigate more on this issue to aid in the planning of the country’s development.