THE IMPACT OF SCHOOL CLOSURE AND MERGER ON RESIDENTIAL PROPERTY PRICES

Abstract

The presence of declining birth rate and changing student demographics across various mature estates in Singapore have prompted the Ministry of Education (MOE) to declare 2 rounds of primary school mergers in the past 5 years. The schools targeted for consolidation were average primary schools. The first was announced in 2014 and the second was announced in 2017. Using the primary school merger in 2017, this study seeks the investigate the announcement effect of school closure and merger on HDB resale prices. To examine the casual impact, it uses the difference-in-difference approach that will account for spatial, structural and temporal variations. Furthermore, this study will also utilize Singapore’s unique home-school prioritization guideline to test for the effects of primary school consolidation on housing prices. The study finds that average primary schools in Singapore are deemed as a disamenity. Properties within the proximity of an average school will suffer greater price discount as compared to those located further away. Furthermore, this study also finds that the announcement of school closure and merger have resulted in the presence of price decline for houses located within the school zone. Larger price discount was found 1.5 years after the announcement of school consolidation. Houses located within 1km and 1km to 2km of closed school locations suffered a price decline of 2.53% and 1.56% respectively. While houses located within 1km and 1km to 2km of merged school locations suffered a price decline of 3.45% and 2.15% respectively.