GENERAL TRENDS OF RESIDENTIAL PROPERTY VALUES OF SINGAPORE AND MALAYSIA

Abstract

The values of residential properties are determined by the forces of demand and supply. However, in most countries, the residential property market does not operate totally under Laissez-faire conditions. Government policy, socio-economic trends, legal and political factors affect the behaviour of the residential property market. The residential property market in Singapore for the past decade had experienced two boom periods -in the early seventies and eighties. A study into the background influencing the behaviour of the residential property price movements in the past decade will provide a better understanding of the present and future price trends. In Malaysia, the residential property market had similarly undergone two boom periods in the past ten years. This dissertation compares the trends of residential property values and its contributing factors, for the past decade, between the two neighbouring countries. It also examines whether there is any 'backwash' effect in Johor Bahru resulting from its close proximity to Singapore. It is observed that Singapore's residential property values fluctuate much more than Malaysia. This is due to the different forces and conditions existing in the two countries. Among the various factors, it is observed that Gross National Product has a greater effect on the residential property price trends in Singapore than other economic factors, whereas in Malaysia, it is the Prime Lending Rate that has more influence. There are also other economic factors that are less significant, but nevertheless do indirectly affect the residential property values in both countries. It is also observed that the residential property price trends in Johor Bahru is more positively correlated to the residential property price trends in the Central Area of Singapore than Kuala Lumpur.