HOUSING PRICE-A HEDONIC ANALYSIS OF THE PROXIMITY EFFECT OF DISTANCE TO GEYLANG RED LIGHT AREA

Abstract

Geylang, an old town located at the southern flank of Singapore, had eluded the fast pace development of the country despite its excellent location near the city. This may be due to its status as one of the six areas designated as a red light area. Geylang is famous for its vice operations and the wide range of delicacies available there. The activities in that area will generate positive and negative externalities which in turn affect the value of the surrounding housings. This study thus aims to determine the net externality effect of Geylang, and whether the value of the surrounding housings within a kilometre away will be affected by the externality. Hedonic model is used to measure the direction and magnitude of the externality. A survey is also conducted to study the residents' perception of living near Geylang red light area. The key results show that although housing located near to the study area will generally suffer a discount on their transacted price, the magnitude of the impact is found to be significantly small. The negative effect may be offset by the many positive factors found in the study area such as proximity to central business district, good transport infrastructure, etc. The majority of the residents living near Geylang red light area also expressed satisfaction with their current residence. They do not feel significant negative influence or inconvenient in living next to the study area as they feel that the vice operations are contained in the area set out by the authority and they do not interfere with the residents' daily activities.