REGULATION OF THE PRIVATE HOUSING MARKET IN SINGAPORE

Abstract

Land-management policies, either implemented through state allocation of land for residential development or the imposition of various regulatory measures on housing transactions, have been used in attempts to stabilise housing prices especially in land-scarce economies such as Singapore. This honours thesis will attempt to study the various policies and rules that are used to regulate the Singapore private housing market. Reasons often cited for state intervention include various efficiency and equity issues, besides the need to stabilise the property market. An underlying reason in support of government regulation is to curb or reduce opportunities for destabilising speculative behaviour which may result in deflationary pressures such as those that happened in Japan during the 1990s and more recently in a number of Asian economies. The latter crisis has been associated with the "boom-bust" effect of property prices due to irrational speculation. Through a time-series regression analysis of the impact of government policies on private residential property prices (RPPI), it was found that the May 1996 anti-speculative measures implemented by the Singapore regulatory authorities had a significant negative impact on private housing prices. The analysis also showed that the supply of HDB units had little impact on RPPI, while the gross supply of private residential units (with a large proportion supplied through state land tenders) had a significant negative impact on private housing prices. Such policies, when properly timed, may be essential to ensure sustainable stability of the housing market in land-scarce Singapore.