EXOGENOUS DETERMINANTS OF COLLECTIVE SALES AND THEIR IMPACTS ON TRANSACTION PRICES

Abstract

To date, the Singapore residential property market has witnessed two major rounds of collective sale fever, bearing a large familiarity with regards to the post-collective sales impacts resulting from the phenomenon. Few existing literatures, however, cover the exogenous determinants that focus on the pre-collective stage. This paper therefore seeks to provide an in-depth analysis on exogenous determinants that trigger an en-bloc sale for better understanding. Hypothesising availability of GLS sites, rising housing prices, and level of transaction activity as the key exogenous factors, it is predicted that they have measurable effects on the collective sale likelihood. Further studies were conducted to determine the relationships with the collective sale and resale prices in each individual market. Using the Probit model, the probability between each key determinant and a positive en-bloc outcome relative to one another was calculated. Ordinary Least Squares (OLS) regression model was subsequently used to identify the various effects on price. The end-result shows that all exogenous determinants tested for do have significant impacts on the collective sale occurrence of a development. It is also found that the intrinsic characteristics of a development, such as the tenure and age, remain the most important when it comes to the trigger of a collective sale. Nonetheless, the intensity of transaction activity was, interestingly, found to have the largest impact as an exogenous factor and second most critical when compared with other control variables, surpassing the importance of most intrinsic development characteristics. Notwithstanding these initial findings, an extension study deems rising housing prices to have the largest impact on transaction prices in both markets.