A VALUATION OF THE ATTRIBUTES OF SINGAPORE HDB FLATS : A HEDONIC APPROACH

Abstract

This academic exercise aims to examine the resale of public housing by using the Hedonic Pricing Approach. The theoretical framework of Rosen's procedure is presented for a better insight of the background of the approach. This theoretical framework relates housing prices to the housing attributes. In this study, cross-sectional data is employed to measure the influence of each of the attributes on the value of residential property. This also allows for the estimation on the marginal values of an additional unit of each attribute.

The Box-Cox transformation framework was employed in the study as it allows us to obtain the functional form which maximizes the log likelihood.

With the specific functional form, there are seven significant variables. They are namely: • Age of the dwelling

• Area of the dwelling

• Number of bedrooms

• Distance to Central Business District (CBD)

• Distance to town center

• The level which the dwelling is situated and

• The number of secondary school within one kilometer

The estimated marginal valuation of these variables range from $273 .40 to $44 782.10. With these results, a cost and benefit analysis is presented to review the Main and Interim Upgrading Programme and the Selective En Bloc Redevelopment Scheme. It is also found that the Central Provident Fund Housing Grant have a minimal effect on the housing price, however, there is a certain degree of effectiveness of this policy. And perhaps by offering a higher grant to those who stay with their parents may help to solve the problem of the graying population as well as to curb the rising demand of housing. Also being aware that the level of dwelling is a significant factor in influencing housing price, those newly built flats are now sold at different prices at different levels. Thus we can see the result is consistent with the government actions. In addition, government also starts to build flats with additional rooms, such as utility rooms. Hence this policy reinforced the result we have obtained. The government's concern for its residents' welfare causes them to look into some insignificant factors, such as orientation of blocks and noise pollution from heavy traffic etc.