IMPACT OF MRT ANNOUNCEMENTS AND PROXIMITY TO MRT ON PRIVATE RESIDENTIAL PROPERTY PRICES

Abstract

This study seeks to quantify the impact of the announcement of Mass Rapid Transit (MRT) expansions on condominium prices. The paper also aims to examine the housing price dynamics in three phases of MRT development. A quasi-experimental before-and-after with difference-in-differences model was applied on resale transaction data in the period from Q1 1998 to Q4 2012. The data was sampled within a 500 metres and 1,000 metres radius, of stage 3 Circle Line MRT stations, to form the treatment and control groups respectively. It is found that the anticipated accessibility benefits of the planned MRT station were capitalised into housing prices, with a 0.216% premium per quarter after the date of announcement. The sustained effects of the start of each period were positive and were determined to have a larger influence on housing prices compared to the immediate effects. The sustained effects of the opening of the MRT (period 4) had the largest impact among the impact variables at a premium of 0.197% per quarter. It was also observed that contrary to existing literature, the immediate effect of the announcement has a large price discount of 16.4% on property prices. This could possibly be attributed to the anticipation of negative externalities in the form of noise and air pollution as well as traffic congestion from the construction period. In addition, the sustained effects of the announcement (period 2) and the immediate impact of the start of construction were not significant statistically, possibly due to the lack of observable data points in these two periods.