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

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