PRICE MOVEMENT OF RESIDENTIAL PROPERTIES IN THE PROXIMITY OF NORTHEAST MRT LINE

Abstract

This study focuses on the price movements of private apartments/condominiums and HDB resale flats along the Northeast MRT line (NEL) from the announcement phase till the operation phase, taking into consideration the major events that have affected the property market from 1995 to 2004. The properties in the study are categorized into 2 groups: one group with properties situated within 500m and the other group with properties located more than 500m from the NEL. A hedonic regression model, which takes into account the physical attributes of the properties, is adopted in this study to capture the price movements. As private apartments/condominiums and HDB resale flats belong to two different market segments, the prior hypothesis is that their price movements behave differently in response to changing market conditions. Private apartments/condominiums and HDB resale flats located more than 500m from NEL have a lower variability in the quarterly price changes than those near to NEL. In addition, the price premiums of private apartments/condominiums and HDB resale flats near to NEL within the same period are also examined. The result shows that private apartments/condominiums located near to NEL command a much higher premium than HDB resale flats located in comparable locations from 1995 to 2004. The premium a purchaser is willing to pay for an apartment/condominium unit and HDB resale flat in close proximity to NEL can be as high as 34.9% (3rd quarter 1998) and 8.3% (4th quarter 2001) respectively after the announcement of NEL.