WILLINGNESS TO PAY FOR EXTRA FLOOR SPACE

Abstract

The Singapore government launched the Main Upgrading Programme (MUP) for public housing estates in 1992. Among the provisions of the upgrading is the extension of the internal floor area of flats. While government subsidises pay for 64% to 92% of the upgrading cost depending on the types of upgrading works and the flat types, residents must pay the difference. This research was undertaken to evaluate the factors that affect how much flat owners are willing to pay to participate in the upgrading programme . It does this by looking at the amount they are willing to pay to get the additional floor space. This study focuses on two precincts in Ang Mo Kio New Town and evaluates the factors that affect residents willingness to pay for additional floor space by means of a questionnaire. Besides the survey, works pertaining to this area of study were reviewed to support the research strategy. It was discovered that willingness to pay is positively related to property value, household income, area of flats, area per person in the household, and the availability of finance. Satisfaction level regarding their present flats were not significant in influencing the amount respondents were willing to pay. In general, the mean amount respondents were willing to pay for additional floor space is $1,110 per sq. m.. This is insufficient to cover even the subsidised construction cost of additional floor space. Thus, respondents in these two precincts are not willing to pay much to participate in the upgrading programme.