EMPIRICAL ANALYSIS OF THE RELATIONSHIP BETWEEN SIZE AND VALUE OF CONDOMINIUMS IN CENTRAL AREA IN SINGAPORE

Abstract

This study aims to empirically analyse the relationship between size and price per square metres of condominium units in district 9 and 10 in Singapore. This relationship between these variables is crucial especially to valuers who use the sales comparison approach to appraise a property. Valuers who assume a linear relationship between the two variables will give a constant reduction in price for every unit increase in size. However, this assumption does not reflect the true market perception. The main tool used to carry out this study is the Multiple Regression Analysis and the methodology follows closely to a recent study carried out by M. L. Wolverton in 1996 in Tucson, Arizona. Findings show that the relationship between size and price per square metre of the condominium units in the study area is not linear. Therefore, it concludes that the law of diminishing demand is applicable to this particular characteristic (i.e. SIZE) of the property consumed. The study has also discovered that when plotted on a graph, the relationship shows a minimum point whereby price per square metres of a condominium unit will increase with per unit increase in size The findings aim to provide a more accurate appraisal of condominium units in future.