Posted: 24 Feb 2015 Last revised: 29 Jul 2015
Date Written: July 28, 2015
The governments of Malaysia and Singapore reached a landmark agreement in May 2010 to end the leases for the nearly 80-year-old railway lines and stations in Singapore, which were operated by Keretapi Tanah Malaya (KTM), a firm owned by the Malaysian government, with effect from July 1, 2011. This study uses the cessation of KTM railway services in a quasi-experiment design to test real estate capitalization effects of the removal of train noise externalities. Based on the non-landed housing transactions data in Singapore from January 2005 to June 2013, we find that houses located within 400 meters from the railway lines increased by 3.5% on average relative to houses located outside the 400 meters boundary after the announcement of the agreement. The removal of train noise externalities increases the prices of houses in the affected area by 13.7% on average in the post-cessation of KTM railway services. Realized economic benefits associated with the cessation of the railway services were estimated at S$0.36 billion based on houses sold in the post-KTM period.
Keywords: Noise Externalities, Housing Price, Distance to Railway Line, Keretapi Tanah Melayu (KTM), Treatment, Quasi-Experiment
JEL Classification: D62, H23, R38, R48
Suggested Citation: Suggested Citation
Diao, Mi and Qin, Yu and Sing, Tien Foo, Negative Externalities of Rail Noise and Housing Values: Evidence from the Cessation of Railway Operations in Singapore (July 28, 2015). Available at SSRN: https://ssrn.com/abstract=2568530 or http://dx.doi.org/10.2139/ssrn.2568530