IMPACT OF VACATED SCHOOLS ON SURROUNDING PROPERTY PRICES

Abstract

Singapore is facing a declining student population due to low fertility rate. As student population is heavily dependent on the total fertility rate, public schools are due to see declining student population across all levels of education. The Ministry of Education (MOE) has responded by announcing over 30 secondary schools slated for merger from 2016 onwards so as to maintain a certain ‘critical mass’ needed to sustain quality education in schools. This research seeks to analyse the impact of low ranked vacated schools on housing prices using the difference-in-difference (DiD) approach to measure the before and after effects of school vacate. The DiD approach considers both spatial (treatment zone within 1km of vacated school vs control zone of 1-2km) and temporal (before versus after school vacate). To test for heterogeneity, transactions in the treatment zone were separated into intra (varying distance) and inter-neighbourhood characteristics (noise pollution versus traffic congestion). The results show that there was a 4.3% and 3.3% increase in HDB and private resale transactions respectively after the school vacated event. The effects vary in distances from the school vacated site (higher price increases nearer to the site) as well as neighbourhoods with different characteristics (lower price increases in noise polluted and congested areas; higher price increases in less noise polluted and less congested areas). Survey results support the findings, noting that the negative externalities exhibited by low ranked schools is an off-putting quality and could therefore influence homebuyer’s purchasing decision in choosing locations. Research findings provide policymakers with better understanding into homebuyer’s household location choice and consumption patterns, thus potentially improving decision-making on policy and urban planning design with an understanding of social and physical ramifications.