Suburban-urban price gap narrows because of MRT, amenities

SINGAPORE'S MRT network, along with a lethargic high-end market, has led to a narrowing price gap between suburban condos near MRT stations and those in the CBD/prime districts. 

One way for the authorities to cool the mass segment of the private housing market would be to release more sites further away from MRT stations, reckons Wing Tai chairman Cheng Wai Keung. 

He also notes that the network of MRT stations around the island has also reduced price differentiation between various suburban locations. 

"The MRT transport network is so good that what is important now is not how far a property is from the centre or CBD; it (the price) is now more defined by how close you are to the MRT station. 

In short, shopping malls and other amenities that were in the past offered only in urban locations are now duplicated in suburban areas. 

Average launch prices for new suburban condos near MRT stations, excluding small units, are around $1,000 per square foot (psf). 

Mr Cheng, however, does not believe that the price gap will continue to narrow between suburban and prime locations as "High-end locations still have a certain brand value." 

One solution for the government to tackle the rise in property prices in the suburbs would be to release more land that is not next to MRT stations. 

Land and property values for such sites are lower than those next to MRT stations. 

While Mr Cheng acknowledges the motivation for government to tender out plots closer to MRT stations, to intensify land use near major transport nodes, he highlights some of the benefits of selling more land further away from MRT stations. 

"You bring down the price which will reduce the anxiety of people . . . and help to moderate the urge to quickly want to buy (a property) before price goes up."
Secondly, by selling land that is further from an MRT station, "you allow people a choice to have cheaper housing". 

From the state's perspective too, it makes economic sense to release not-so-conveniently located sites in a hot market rather than in a dull market. 

In the current market, there will still be some takers for such plots.
Source: Business Times – 7 June 2012