How Does Distance to MRT Affect Property Prices in Singapore?  

mrt effect property prices

Most agree that a property’s value is significantly affected by its proximity to an MRT station: in general, the closer your home is to an MRT station, the higher its value. This relationship plays directly into the idea that location is key when it comes to property valuation.

 

MRT Effect on Property Prices in Singapore

Let’s deep dive into the effects a nearby MRT station can have on property prices.

Properties within 500m of an MRT are the most expensive

On average, a property commands a higher price of 10% to 15% when it is near to an MRT station. The closer a property is to an MRT station, the higher the price, with 500m or closer being the ‘gold standard’.

Based on research by NUS (2009 to 2013), the Circle Line stations increased non-landed private housing by an average of 1.6%. When these stations turned operational, those within 400m of the stations saw an increase of 13.2% more than those outside of this distance.

Prices tend to increase twice

Broken down further, there are two levels of increment: Firstly, prices tend to increase when the MRT station is announced. Thereafter, there would be another increase after the MRT station is operational. The caveat is that while construction is going on there may not be a price increase due to the presence of noise, dust and general inconvenience. However, once the trains are running, prices are almost bound to increase.

Previously inaccessible areas generally see the biggest uplift

Another important point to note is that areas that are more inaccessible pre-MRT tend to see greater appreciation. Areas like this include King Albert Park and Beauty World. The reason is because these areas have more to gain from the increased accessibility provided by the new MRT stations as compared to other areas already serviced by more bus routes and alternative MRT stations. Similarly, if a property is near to two or more MRT stations and lines, demand and price for it will stand to increase as there are more transportation choices.

Already-expensive properties in the CCR are less affected by the presence of MRT stations

Value of properties located in the CCR (Core Central Region), however, are less likely to be impacted by a new MRT line. This is because such properties are already highly-priced by virtue of its prime location. Likewise, residents of these estates tend to be better serviced due to a high density of MRT and bus networks, which lowers the impact of a new MRT station. Additionally, demographically, CCR residents who stay in high-end private housing would probably drive and place less value in a close by MRT station.

Nearby MRT stations may also drive rental prices up

Lastly, being near to an MRT station will not just increase the property’s selling price but also increase the rental it can command, especially if the MRT station is also an interchange or houses amenities like shops or eateries.

“If you have these amenities around, you would have a bigger pool of tenants. This translates to higher rentals in the coming years, thus pushing up your value,” says Andrew Nair, Associate Division Director of ERA Real Estate.

 

Benefits of Living Near an MRT Station

The multiple benefits of living near an MRT station help drive demand, thereby pushing prices of nearby properties up. Here are some of the benefits:

1. Value Appreciation

As mentioned above, prices tend to increase long before a new MRT station is operational. Condos near the Downtown Line stations such as Bugis or Chinatown all saw significant price appreciation as soon as in April 2007, after the Downtown line was announced by the then Minister for Transport Raymond Lim. Likewise, rental prices tend to also increase thanks to increased convenience and demand.

2. Strong, Resilient Demand

By virtue of being located near an MRT station, the property enjoys strong and consistent demand, even in an economic downturn. This is a comforting fact should you want to sell or rent out in the future for various reasons.

3. Convenience

If time is money, the dozens of minutes you can save because of a nearby MRT station is truly invaluable. This rings especially true if you don’t drive, and when the time saved is added up over many years. Moreover, many MRT stations these days are equipped with amenities like eateries and shops like convenience stores. Otherwise they are typically near shopping malls or retail hubs. This added convenience can bring about a large improvement to you and your family’s quality of life.

But There are Potential Drawbacks too

However, one must also consider the downsides of living near an MRT station or while it is under construction. As detailed above, noise and pollution may be abundant during construction, which may turn away specific buyers or renters. As for MRT stations up and running, one may be unaccustomed to the track noises from above-ground routes. If you dislike crowds and prefer an idyllic neighborhood, an MRT station may ruin that for you, depending on the area. Heartland stations like Bedok or Tampines draw huge crowds and road traffic daily, which may not be to one’s liking.

 

Conclusion: How sustainable is this ‘MRT effect’?

As seen, living near an MRT station brings great convenience and accessibility that many would pay a good price for today. However, considering that by 2030, 80% of homes will be within 10 minutes from an MRT station, will upcoming MRT stations still bring the same value appreciation to properties?

Aaron Yeo, branch division director of ERA Realty Network, seems to think so: “Consumers are constantly looking out for accessibility, and they will opt to be as close as they can be to an MRT station. When [being] 10 minutes away from the MRT becomes the norm, people will probably start looking for even closer properties that are five or even three minutes away.”

Additionally, former Minister for Transport Khaw Boon Wan affirmed that “government spending on new MRT lines will peak during the next two decades.” Perhaps then, with Singapore’s landscape becoming ever more connected, being near interchanges may also become part of the new gold standard.

 

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This article was written by Ali Musak, who hopes to help PropertyGuru readers make wise choices. When he's not writing, he likes to dream about big houses and read fiction.

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