FACTORS AFFECTING THE AFFORDABILITY OF CONDOMINIUM UNITS IN SINGAPORE

Abstract

The soaring prices of private housing in Singapore in the recent years have become a major concern of Singaporeans. As more and more people aspire private housing, the affordability of this housing type is an important issue. The purpose of this research is to examine the affordability of private condominium units in Singapore at a macro level. This study distinguished the key factors affecting the affordability of the condominium units in Singapore. The relationships among these factors were evaluated using correlation analysis. A regression model which best fitted the data collected was generated and could be used to predict future affordability of condominium units. Out of the 11 proposed factors, eight of them proved to be the significant factors affecting the affordability. They were: condominium units available, occupancy rate of condominium units, domestic prime lending rate, stock exchange index, total tax collected by ERAS, condominium price index, business services and real estate expectation and CPF withdrawal. The prime lending rate was the factor which had the greatest influence on the affordability of condominium units. In any micro studies of affordability, income level was the major indicator of affordability. In this macro study, the result was similar. This was because the high prices of housing had made income and prime lending rate closely related, through the monthly mortgage payment.