Values of Proximity to Schools: An Experiment with School Relocation Events in Singapore

Abstract

This study uses the unique 2 km distance-based priority school allocation rule in Singapore as an identification to test school relocation effects on housing prices in the 2km school zone. Using the school relocation events that occur during the period from 1999 to 2009 in the quasi-experiment, our main results show that school relocation events cause significant price declines of 2.9% and 6.0% for private houses located within 1km zone and in 1km-2km zone from the old school zone, when the school relocation news were revealed 6 months before the relocation. Larger price declines of 5.5% and 6.9% associated with the loss of a school are found for houses located the 1km and 1km-2km from the school locations, when the school relocation events were revealed 12 months earlier. In the public housing market, we also find that school relocations cause significant welfare losses of between 0.7% and 1.4% for households living within the 1km school zone. The treatment effects of the school relocation events are amplified by the school popularity ranking. The prioritization advantages accorded to the houses located within 1km school zone have significant economic value in the private housing market.