IMPACT OF ENVIRONMENTAL RISK ON RESIDENTIAL PROPERTY VALUES

Abstract

This dissertation aims at determining, if any, the impact of environmental risk on residential property values in Singapore. The study sets out to investigate the relationship between the pollutive industries and the surrounding residential properties The Jurong Industrial Estate and its supporting residential base in the Jurong West DGP are thus chosen as the study areas. Four hypotheses are formulated and distance between the Industrial Estate and the residential base is used as a measurement of the price effects. Residential sales transactions that took placed between the year 2002 to 2004 for both the private and public housing sub markets are then reviewed separately. The analysis, found that environmental risk does play a part in determining the sale prices. The closer the property is located to the industrial zone, the lower the price it will command. This negative impact on price is mainly due to the fact that fear of unknown contamination is constantly weighing on the minds of the public. From the regression results, the stigma factor is then found to be developing or worsening over time for the public housing submarket. This finding was in contradiction to that obtained from the private housing submarket. In the private housing submarket, the stigma factor actually subsides over time. This contradictive result can be explained by the fact that the public housing are located nearer to the Industrial Estate than compared to the private housing. Lastly, for the public sector, the impact of environmental risk was found to be significant within l-2km and 2-3km zones and ceases for distance zone within 4-5km. The magnitude of decrease for the public sector varies from $16670.99 to $18013.09, depending on how close the property is from the industrial site. Clearly, a property in the l-2km zone will experience a greater decrease in price than one in the 2-3 km zone. As for the private sector, we conclude that properties located beyond the 3km radius are not affected by the environmental risk element.