IDEAS home Printed from https://ideas.repec.org/p/iza/izadps/dp14730.html
   My bibliography  Save this paper

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
    as

    Download full text from publisher

    File URL: https://docs.iza.org/dp14730.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Gabriel M. Ahlfeldt & Stephen J. Redding & Daniel M. Sturm & Nikolaus Wolf, 2015. "The Economics of Density: Evidence From the Berlin Wall," Econometrica, Econometric Society, vol. 83, pages 2127-2189, November.
    2. Ahlfeldt, Gabriel M. & Pietrostefani, Elisabetta, 2019. "The economic effects of density: A synthesis," Journal of Urban Economics, Elsevier, vol. 111(C), pages 93-107.
    3. Zabel, Jeffrey & Dalton, Maurice, 2011. "The impact of minimum lot size regulations on house prices in Eastern Massachusetts," Regional Science and Urban Economics, Elsevier, vol. 41(6), pages 571-583.
    4. Brueckner, Jan K. & Largey, Ann G., 2008. "Social interaction and urban sprawl," Journal of Urban Economics, Elsevier, vol. 64(1), pages 18-34, July.
    5. Molloy, Raven, 2020. "The effect of housing supply regulation on housing affordability: A review," Regional Science and Urban Economics, Elsevier, vol. 80(C).
    6. Edward Glaeser & Joseph Gyourko, 2018. "The Economic Implications of Housing Supply," Journal of Economic Perspectives, American Economic Association, vol. 32(1), pages 3-30, Winter.
    7. Christian A. L. Hilber & Wouter Vermeulen, 2016. "The Impact of Supply Constraints on House Prices in England," Economic Journal, Royal Economic Society, vol. 126(591), pages 358-405, March.
    8. Ciccone, Antonio & Hall, Robert E, 1996. "Productivity and the Density of Economic Activity," American Economic Review, American Economic Association, vol. 86(1), pages 54-70, March.
    9. Gyourko, Joseph & Molloy, Raven, 2015. "Regulation and Housing Supply," Handbook of Regional and Urban Economics, in: Gilles Duranton & J. V. Henderson & William C. Strange (ed.), Handbook of Regional and Urban Economics, edition 1, volume 5, chapter 0, pages 1289-1337, Elsevier.
    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.
    12. Tan, Ya & Wang, Zhi & Zhang, Qinghua, 2020. "Land-use regulation and the intensive margin of housing supply," Journal of Urban Economics, Elsevier, vol. 115(C).
    13. Jin-Seong Lee, 2016. "Measuring the value of apartment density?," International Journal of Housing Markets and Analysis, Emerald Group Publishing Limited, vol. 9(4), pages 483-501, October.
    14. Eric Fesselmeyer & Haoming Liu & Alberto Salvo, 2022. "Declining discount rates in Singapore's market for privately developed apartments," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 37(2), pages 330-350, March.
    15. Ihlanfeldt, Keith R., 2007. "The effect of land use regulation on housing and land prices," Journal of Urban Economics, Elsevier, vol. 61(3), pages 420-435, May.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Howard, Greg & Liebersohn, Jack, 2021. "Why is the rent so darn high? The role of growing demand to live in housing-supply-inelastic cities," Journal of Urban Economics, Elsevier, vol. 124(C).
    2. 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.
    3. Melanie Krause & André Seidel, 2020. "Land Scarcity and Urban Density within Cities," CESifo Working Paper Series 8660, CESifo.
    4. Acolin, Arthur & Colburn, Gregg & Walter, Rebecca J., 2022. "How do single-family homeowners value residential and commercial density? It depends," Land Use Policy, Elsevier, vol. 113(C).
    5. Ryan Greenaway-McGrevy & Gail Pacheco & Kade Sorensen, 2021. "The effect of upzoning on house prices and redevelopment premiums in Auckland, New Zealand," Urban Studies, Urban Studies Journal Limited, vol. 58(5), pages 959-976, April.
    6. Ahlfeldt, Gabriel M. & Pietrostefani, Elisabetta, 2019. "The economic effects of density: A synthesis," Journal of Urban Economics, Elsevier, vol. 111(C), pages 93-107.
    7. Carozzi, Felipe, 2020. "The role of demand in land re-development," Journal of Urban Economics, Elsevier, vol. 117(C).
    8. Greenaway-McGrevy, Ryan & Phillips, Peter C.B., 2023. "The impact of upzoning on housing construction in Auckland," Journal of Urban Economics, Elsevier, vol. 136(C).
    9. Larson, William & Yezer, Anthony & Zhao, Weihua, 2022. "Urban planning policies and the cost of living in large cities," Regional Science and Urban Economics, Elsevier, vol. 96(C).
    10. Molloy, Raven & Nathanson, Charles G. & Paciorek, Andrew, 2022. "Housing supply and affordability: Evidence from rents, housing consumption and household location," Journal of Urban Economics, Elsevier, vol. 129(C).
    11. Davidoff, Thomas & Pavlov, Andrey & Somerville, Tsur, 2022. "Not in my neighbour’s back yard? Laneway homes and neighbours’ property values," Journal of Urban Economics, Elsevier, vol. 128(C).
    12. Sebastian Eichhorn & David Pehlke, 2022. "Unintended effects of regional planning in Germany," Growth and Change, Wiley Blackwell, vol. 53(2), pages 933-950, June.
    13. Tirthatanmoy Das & Kabir Dasgupta, 2018. "Evaluating the Impact of Mothers' Self-esteem on Early Childhood Home Environment: Evidence from NLSY," Working Papers 2018-03 JEL Classificatio, Auckland University of Technology, Department of Economics, revised Oct 2019.
    14. Brandts, Jordi & Busom, Isabel & Lopez-Mayan, Cristina & Panadés, Judith, 2022. "Dispelling misconceptions about economics," Journal of Economic Psychology, Elsevier, vol. 88(C).
    15. Adam Found, 2021. "Development Charges and Housing Affordability: A False Dichotomy?," IMFG Papers 56, University of Toronto, Institute on Municipal Finance and Governance.
    16. Christian A. L. Hilber, 2019. "Immobilienpreise und Immobilienzyklen und die Rolle von Angebotsbeschränkungen [The impact of local supply constraints on house prices and price dynamics]," Zeitschrift für Immobilienökonomie (German Journal of Real Estate Research), Springer;Gesellschaft für Immobilienwirtschaftliche Forschung e. V., vol. 5(1), pages 37-65, November.
    17. Gilles Duranton & Diego Puga, 2023. "Urban Growth and Its Aggregate Implications," Econometrica, Econometric Society, vol. 91(6), pages 2219-2259, November.
    18. Gilles Duranton & Diego Puga, 2020. "The Economics of Urban Density," Journal of Economic Perspectives, American Economic Association, vol. 34(3), pages 3-26, Summer.
    19. Ahlfeldt, Gabriel M. & Barr, Jason, 2022. "The economics of skyscrapers: A synthesis," Journal of Urban Economics, Elsevier, vol. 129(C).
    20. Raven S. Molloy & Charles G. Nathanson & Andrew D. Paciorek, 2020. "Housing Supply and Affordability: Evidence from Rents, Housing Consumption and Household Location," Finance and Economics Discussion Series 2020-044, Board of Governors of the Federal Reserve System (U.S.).

    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

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:iza:izadps:dp14730. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Holger Hinte (email available below). General contact details of provider: https://edirc.repec.org/data/izaaade.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.