ECONOMETRIC STUDY OF THE LINKS BETWEEN THE PROPERTY MARKET AND THE PROPERTY STOCK COUNTERS

Abstract

In whichever country one names, real estate constitutes a major proportion of the nation's assets or fixed capital formation. This is no different for Singapore as one can gleen these statistics from the pages of our Property Market Consultative Committee Report and other publications. Unfortunately, little studies have been conducted in the past as to the linkages that bind the industry together. This work will therefore pioneer an attempt to explain the many interlockings which hold our industry and its stock cousin. Even till today, real estate participants have relied most strongly on the intangible element called 'gut-feeling'. The few practicing professionals still have not resorted to the application of economic forecasting. Instead many fall back on simple straight-line projections. Perhaps this is due to the unhealthy remunerative standards in the industry, namely paid on a commission basis. The latter stifles technocratic sophistications which is needed for sharpening the current and future business cutting edge. Owing to the many strictures which confronted the writer, this study is not out to forecast in precision, but to provide the reader an understanding of the nature of the real estate, construction and property stock market. Using the SAS package on the IBM 3081 mainframe, the results were interpreted based on a property based analysis. The market being imperfect has been highlighted in the study and mistakes committed in the past are also emphasized. Finally, how everything merges with the Property Stock market is explained. In this light, the effectiveness of using econometric forecasts to Property counters is evaluated and subsequently the efficiency of the latter is explored.