Spatial Difference-in-Differences (SDID) Models for Impact of New Mass Rapid Transit Line on Private Housing Values

43 Pages Posted: 19 May 2016 Last revised: 24 May 2017

See all articles by Mi Diao

Mi Diao

National University of Singapore (NUS) - Department of Real Estate

Delon Leonard

National University of Singapore (NUS)

Tien Foo Sing

National University of Singapore (NUS) - Department of Real Estate

Date Written: May 18, 2016

Abstract

This study uses the opening of the new Circle Line (CCL) in Singapore as a natural experiment to test the effects of urban rail transit networks on non-landed private housing values. We use a network distance measure and a local-polynomial-regression approach to identify the CCL impact zone that shows discontinuity in housing price gradient between a treatment zone and a control zone. We then estimate a spatial difference-in-differences model that accounts for spatial autocorrelation in housing price changes in the two zones “before and after” the opening of the CCL, in addition to other controls, such as housing attributes, local amenities, spatial and temporal fixed effects. We find that the opening of the CCL increases housing value in the treated neighbourhoods located within the 600-metre network distance from the new CCL stations by approximately 7.8%, relative to other properties in the untreated neighbourhoods. We also find significant “anticipation” effects that appear 1 year prior to the opening of the CCL line, and the effects diminish closer to the actual opening date. The results imply that inter-dependence spatial structure between the treated and the untreated neighbourhoods is relevant and significant, if neglected, may lead to over-estimation of capitalization effects of new transit lines on housing values.

Keywords: Urban rail transit network; housing values; network distance; local polynomial regression; spatial difference-in-differences estimator; spatial autocorrelation

JEL Classification: C21, R4, R21

Suggested Citation

Diao, Mi and Leonard, Delon and Sing, Tien Foo, Spatial Difference-in-Differences (SDID) Models for Impact of New Mass Rapid Transit Line on Private Housing Values (May 18, 2016). Available at SSRN: https://ssrn.com/abstract=2781649 or http://dx.doi.org/10.2139/ssrn.2781649

Mi Diao (Contact Author)

National University of Singapore (NUS) - Department of Real Estate ( email )

4 Architecture Drive
Singapore 117566
Singapore

Delon Leonard

National University of Singapore (NUS) ( email )

Bukit Timah Road 469 G
Singapore, 117591
Singapore

Tien Foo Sing

National University of Singapore (NUS) - Department of Real Estate ( email )

4 Architecture Drive
Singapore 117566
Singapore

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