THE EFFECTS OF LOCATIONAL DIFFERENCES ON HOUSING AFFORDABILITY AND RESIDENTIAL LOCATION CHOICE

Abstract

This study looks into the impact that locational differences has in accounting for differences in inter-town HDB New Town resale housing prices brought about by consumers’ preferences. The study is conducted in two stages: Firstly, a Hedonic Price Model is used to investigate the variations in housing prices due to locational differences; Secondly, a Binary Logistic Model is used to explain disparity in housing prices due to consumers’ varying preferences for locational attributes. Results for the hedonic model, based on the 2,036 housing transactions, conclude that the variations in inter-town housing prices could be explained by locational differences offered at different levels between towns. Town difference alone is found to have resulted in a 46.38% increase in housing prices in Bishan. This finding strongly suggests that high housing prices in Bishan and the high prices recorded in other New Towns may be purely due to the better location and amenities of the housing location. A binary logistic model is estimated based on 412 residents’ perception survey to analysis the importance of locational attributes when making a housing location choice. Results show that a resident who indicated a one unit increase in the level of importance of all locational variables is 2.91 times more likely to choose to reside in Bishan due to the greater levels of amenities provided there. These findings have implications for urban planners and town councils and it can serve as a guide for urban planners to determine the types of development which are most valued by residents, thus increasing the provision of these amenities.