THE IMPACT OF POPULAR PRIMARY SCHOOLS ON CONDOMINIUM PRICE: A NEW PERSPECTIVE TO VIEW AN OLD QUESTION

Abstract

Many recognised that education is the key in securing a child's future. Parents are thus keen to give their children the best education possible, even if it means deliberately moving closer to the desired school so as to raise the chances of success in gaining admission to the school. This parental demand results in price increases of nearby condominium units, and led many to believe that distance to the school plays an important role in housing price determination. It is the premise of this study to prove that, in cases where the school is oversubscribed, distance plays a muted role in determining property prices because ultimately, whether a child is successful in gaining admission to the school or not depends on the admission procedure. Through hedonic regression analysis, where variations in house, neighbourhood and school characteristics are accounted for, the price increase is found to be $33,975 if it is harder to be admitted to the school by 1%. The result is significant even after restricting the study area to condominiums located within 1 kilometre from the school. Hence, in cases where the school is so popular that some potential students have to be turned away every year, distance to the school is not as important in explaining variations in housing price, because the popularity of the school, which is determined by the admission procedure, overrides its importance.