Neighbourhood Stability and Housing Demand: An Analysis of the HDB resale transactions

Abstract

Social cohesion and neighbourhood stability is a quality Singapore is actively pursuing. The Housing Development Board (HDB) has rolled out multiple initiatives over the year, such as the Rebuilding Our Heartlands (ROH) initiative with recurring phases since 2007. This is the first research that analyses how neighbourhood population turnover, which measures neighbourhood stability, affects housing demand in the HDB resale market in the Singapore context. It defines subzones as neighbourhoods and the share of yearly resale transactions among all HDB units in the subzone as population turnover. To estimate the impact of neighbourhood population turnover in the year t-1 on the resale prices in the year t, multiple regressions and First Difference approaches are used for the housing unit- and subzone-level analyses, respectively. The estimation results at the unit level show a significant, negative association between population turnover and HDB resale prices, suggesting that lower population turnover leads to higher housing demand and higher transaction prices. They are robust across different specifications and different measures of population turnover. Results at the subzone level show a very small, positive or insignificant impact of population turnover on resale prices, depending on the number of year lags. While population turnover could potentially imply neighbourhood popularity which is likely to be associated more resale transactions at the aggregate level, therefore, results provide stronger evidence toward the important role of lower population turnover to housing demand. These findings offer imperative planning implications. Population turnover could be used as an important neighbourhood indicator for future planning decisions. A proper evaluation and analysis of population turnover will help design relevant policies aiming at neighbourhood improvement especially through increasing neighbourhood stability and the level of social cohesion.