April 25, 2019

Senior Lecturer Eric Fesselmeyer and A/P Liu Haoming from the NUS Department of Economics discuss their research on the impact of commuting times on housing prices in The Straits Times.

While many studies have examined why housing further away from employment centres sells for a lower price, there are currently none that measure the effect of uncertainty in commuting and day-to-day variations like occasional delays. To fill this gap, Dr Fesselmeyer and A/P Liu conducted a study to examine whether flats in Housing Development Board (HDB) blocks with high travel-time uncertainty are sold at a discount.

Using data on trips on public transport as well as transactions of HDB resale flats, the researchers found that both average trip duration and travel time uncertainty may be translated into price. In particular, an increase in average trip time to the CBD of ten minutes decreases the flat price by about 7.5%. At the same time, a one-minute increase in the standard deviation of travel time above five minutes decreases prices by around 2%. Simply put, people value not just commuting time, but also certainty in their commute.

Given these findings, Dr Fesselmeyer and A/P Liu thus urge policymakers to be alert to public transport bottlenecks that are vulnerable to day-to-day changes in congestion, which may in turn cause unexpected delays. Bus operators should also consider the potential trade-off between average travelling time and travelling uncertainty when planning routes.

Read the full article here.