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How Much Do Households Dislike Local Density? And Do Developers Fully Consider Their Preferences? Evidence from a Policy Change in Singapore

Author

Listed:
  • Fesselmeyer, Eric

    (Monmouth University)

  • Liu, Haoming

    (National University of Singapore)

  • Poco, Louisa

    (National University of Singapore)

Abstract
This paper measures how much households dislike density in their immediate surroundings. Using transaction and administrative data in Singapore, and exploiting the introduction of a regulation that restricted the number of housing units for certain land lots, we find that households do indeed discount density: a 10% increase in within-development density decreases price per square meter by up to 4%. Further, we find that the mean price per square meter of the average development increased by 1 to 3% after the regulation was introduced, while the amount of built-up space remained constant. The increase in total revenue suggests that developers may underestimate the externality caused by density. Our results are particularly relevant during the lockdowns and social distancing of the coronavirus pandemic.

Suggested Citation

  • Fesselmeyer, Eric & Liu, Haoming & Poco, Louisa, 2021. "How Much Do Households Dislike Local Density? And Do Developers Fully Consider Their Preferences? Evidence from a Policy Change in Singapore," IZA Discussion Papers 14730, Institute of Labor Economics (IZA).
    • Handle: RePEc:iza:izadps:dp14730
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    References listed on IDEAS

    as
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    10. Fesselmeyer, Eric & Seah, Kiat Ying Sky, 2018. "The effect of localized density on housing prices in Singapore," Regional Science and Urban Economics, Elsevier, vol. 68(C), pages 304-315.
    11. Ying-Keung Chan, 1999. "Density, Crowding, and Factors Intervening in Their Relationship: Evidence from a Hyper-dense Metropolis," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 48(1), pages 103-124, September.
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    More about this item

    Keywords

    land-use policy; regulation; density; externalities;
    All these keywords.

    JEL classification:

    • R20 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - General
    • R21 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Housing Demand
    • R38 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Government Policy

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