Forward-looking Behaviour In Singapore's Private Housing Market: The Impact of The North-East Transit Line On The Housing Price Gradient

Abstract

This thesis seeks to investigate the effects of the North-East Line (NEL) Mass Rapid Transit (MRT) extension on neighbouring private housing resale prices. A hedonic price analysis on the Singapore private housing market is conducted using 99-year non-landed resale private houses and Executive Condominiums (EC) transactions located near the NEL from 1st January 1995 to 31st December 2008. The Ordinary Least Squares (OLS) and the spatial expansion method were used to estimate the hedonic price model. After controlling other variables, the estimations show the presence of positive announcement effects and negative construction effects on the non-landed private resale prices located within 800 metres of the NEL development. In particular, the announcement effects from the NEL were so strong that housing prices were higher than the prices levels when the NEL became operational. This suggests that the private resale housing market was over-reactive to market news on the NEL developments.