A TIMELINE ANALYSIS ON THE IMPACT OF A HOSPITAL ON RESIDENTIAL PROPERTY PRICES

Abstract

This paper demonstrates how the presence of a hospital in a neighbourhood is capitalised into house prices during the post-announcement, construction, and post-completion phases. Hospitals located near homes are valued for the benefits of spatial proximity, but may also be a source of inconvenience to residents. A controlled study was carried out on Khoo Teck Puat Hospital which was the first hospital to be developed post-SARS, Property prices within an influence area 500m away from the hospital and a control area located beyond this buffer were analysed using a constant-elasticity hedonic pricing model for each time period. An alternative model testing for non-linearity in elasticities was also tested. The regression results indicate significant results suggesting that homes within the influence area enjoyed between 3% to 9% premiums over the control area, contrary to expectations that net negative externalities in some periods would depress home prices