How School Proximity Affects House Prices In Singapore

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Singaporean parents will go to great lengths to ensure their children enter the popular schools. Primary 1 registration starts in the second half of every year.

The allocation system by the Ministry of Education (MOE) consists of 7 phases. The first 3 phases – 1, 2A(1) and 2A(2) – give priority to students affiliated with the school of choice, which include kids with siblings currently also studying in the school, whose siblings and parents are alumni of the school, whose parents are members of management and advisory boards of the school, or whose parents are teaching staff within the school.

Prioritization dependent on the distance between the primary school and a child’s home is considered in the next 2 phases named 2B and 2C.

The distance-calculated rules assign places consecutively to children living within a 1 kilometer radius of the school, followed by children living between 1 kilometer and 2 kilometer from the school. If there are more children staying between the 1 km and 2 km radius than places available, the balloting is conducted to assign places in these 2 phases.

In a study conducted jointly with 2 other researchers at the National University of Singapore (NUS), Miss Yang Yang, a PhD student at the Department of Real Estate, and Dr Satyanarain Rengarajan, we examined the extent to which distance-dependent school allocation rules influence households’ home-purchasing decisions. In this research, we used 16 primary school resettlement events between 1999 and 2009 in Singapore to test the impact of school relocation on residential prices.

Our key results showed that such events resulted in significant price drops of 2.9% for private non-landed homes sited within 1 kilometer of the old school compounds relative to comparable residences sited outside the 2 kilometer zone, in the 6 months prior to the actual relocation.

Larger price declines of 5.5% and 6.9% associated with the loss of a school are discovered for houses located 1 kilometer and 1 kilometer to 2 kilometers from the school locations 12 months prior to the actual move.

In the public residential market, we also discovered that school relocations cause significant but lesser losses of between 0.7% and 1.4% for home prices within the 1 kilometer school zone.

The effects were amplified in the regions impacted by relocations of popular primary schools in the top 50 positions, based on the oversubscribed rate in Phase 2C and academic performance. One North Eden Condo is located around such a popular school.

In the private home market, the loss of a top 50-ranked school resulted in housing prices to fall by 8.5% and 12.2% for the 1 km and 1 km to 2 km school regions, respectively.

The comparable declines in public residential prices are estimated at 5.1% and 2.4% for the 1 km and 1 km to 2 km old school radius, respectively.

We discovered that the prioritization rule as represented by the 1 kilometer school zone is more pertinent in the private home market than in the public home market. That is why One-North Eden is so popular with the locals.

We also find that in highly dense HDB estates, families staying within 200 meters from the schools are more likely to be impacted by negative externalities related with school congestion and noise.

We tested the impact of a school’s move on housing prices in the new school location too, and discovered that such re-sitings raise both private housing and HDB prices in the new school radius after 6 months of the relocation.

The discoveries of our study validate that residences sited within a 2 kilometer radius of popular primary schools dictate high price premiums. Singapore isn’t the only country where such rate discrepancies exist.

In Beijing, China, a study discovered a premium of 7.2% for homes located within the attendance regions of key primary schools.

The phenomenon is not unique to Asian societies only; there is evidence pointing to the fact that families pay higher rates for houses sited within school attendance zones in Canada, Britain, the United States and France as well.

Source: https://www.straitstimes.com/opinion/how-school-proximity-affects-house-prices-in-singapore

Agarwal Sumit is the Low Tuck Kwong professor and vice-dean (research) at the National University of Singapore Business School. Sing Tien Foo is the Dean’s Chair associate professor and deputy director at the NUS Institute of Real Estate Studies.

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