MODELLING PRIVATE RESIDENTIAL MARKET

Abstract

The private residential market is of great concern to many Singaporeans as it serves both consumption and investment purposes. Even though approximately 85% of Singaporeans stay in public housing built by the Housing Development Board of Singapore, many aspire to upgrade to private housing for various reasons. This can be seen from the publicly "built Executive Condominiums" that has built qualities and facilities comparable to the private sector. A review of the local private residential market showed that the local private residential market has been turbulent in the 1990s with many investors caught out by the wild movements in price levels. Therefore, this study was carried out to model the private residential markets so as to understand the workings of the market better for the benefit of investors, developers and policy makers. The study uses annual data from 1980 to 2002 to develop a series of expectations augmented stock-flow price and construction equations. The econometric models formed has high explanatory power as can been seen later. Finally, some forecasting is done up to 2008, and a brief investigation into the rate of residential land price inflation is also carried out.