AN ANALYSIS OF THE HDB HOUSING MARKET

Abstract

The Housing and Development Board was established in 1960, less than a year after Singapore attained self-independence. Over the years, homeownership has emerged as a national goal and priority. In a period of 27 years, more than half a million units have been built and at present about 85 percent of the country's population reside in HOB flats. As the proportion of the country's population living in HOB flats and in particular owner-occupied flats is likely to increase in the future, the public housing market can be expected to assume increasing importance. Because, very little has been done in the past to examine the economics of the public housing market, this Academic Exercise aims to provide an insight into the workings of the public housing market and highlights the implications of the findings made. This Academic Exercise is basically divided into three sections. The second and third chapters which constitute the first section deals with the determinants of demand and supply in the HOB new owner-occupied flats market. The empirical analysis in chapter three derived a number of interesting findings. Firstly, it was established that the contribution rate to the Central Provident Funds (CPF) which is set by the government, has the largest influence on the demand for new owner-occupied flats. Secondly, it was found that the HDB's building program has not been used as a pump priming device as popularly asserted. Thirdly, it was established that the HDB's building program does in fact respond to the waiting list as HOB has always maintained. The second section of this Academic Excercise raises and discusses a number of interesting issues which are pertinent to the new flats market. Among the many issues raised and discussed, it was established via a simple empirical analysis that the subsidy policy for HOB flats was inequitable. The final section highlights the unique nature of the HOB resale market and develops a theoretical framework of the HOB resale market. This theoretical framework is then used to determine the HDB's posted price policy for resale flats.