IMPACT OF SERS DEVELOPMENT ON PRIVATE RESIDENTIAL RESALE PRICE

Abstract

Selective En Bloc Redevelopment Scheme (SERS) is an urban renewal policy aimed at improving neighbourhood quality through redevelopment of old multi-family public housing. This paper examines if SERS have indeed improved the quality of life in the neighbourhoods in which they are implemented.

In order to do this, the first part of the paper examines the short-term amenity effects of the development on surrounding property prices, with further examination of whether choice of locality for SERS sites had a large effect on the treatment. The second part of this paper then examines how amenity effects change in the longer run in order to assess the overall effectiveness of the policy in achieving its long-term goal of reversing the trend of declining neighbourhood quality.

In order to isolate and measure the amenity effects, a strict sample was specified for the study. Neighbouring Condominiums instead of HDBs were chosen in order to reduce the effect of increased supply on prices. The period of study was also restricted to the post-completion period to reduce the effect of information capitalisation on prices. Condominium resale prices post development were thus chosen as a suitable proxy to measure amenity effects. A total of 16,883 resale transactions up to 5 years before completion and 2 years after completion are obtained from REALIS for 179 condominiums surrounding the SERS sites between 1997 and 2016. A difference-in-difference hedonic price model regression analysis is applied, controlling for hedonic attributes, spatial differences, and time factors. The results from the first part of the study are statistically significant and showed that SERS led to a large immediate amenity effect commanding a 4.87% premium for neighbouring Condominiums within 2 year post-development. The amenity effect was also observed to be less effective in central regions where the existing quality of estates are expected to be highest, and have the largest positive impact for projects in the Outside Central Region (OCR).

The second part of the research extended the post-completion period to 5 years after completion and include an additional 7,500 resale transactions. A comparison of the treatment effects was used to ascertain the long-term effects of SERS. The second part of the research showed that in the medium to long term, the premium due to amenity effects continued to increase by 0.11% yearly, and concludes that SERS is effective in achieving urban renewal.