IMPACTS OF GOVERNMENT HOUSING POLICIES ON THE PRIVATE RESIDENTIAL PRICES

Abstract

This dissertation aims to understand the different type of government housing policies and investigate the impacts of these policies on the private residential prices in Singapore. From 1980 to 2011, the Private Property Price Index (PPPI) went through a series of price hikes and declines, during which several policies were implemented timely in bid to regulate prices. The defined time frame for this study is from 1980Q1 to 2011Q4. Vector autoregression (VAR) model is adopted in this study. Prior to carrying out estimation of the VAR model, the employed macroeconomic and real estate variables are subjected to several diagnostic tests to ensure that they are stationary. Based on Augmented Dickey-Fuller (ADF) test, after the variables underwent the stationary process, where 1st differencing variables are found to have no unit roots and thus stationary. The Breusch Godfrey (BG) test also verifies no serial correlation between the variables used. Based on the VAR results, the t-statistics values suggest that the various types of housing policies do affect the PPPI significantly. To better interpret the VAR results, impulse response function is also carried out. Overall results also show that PPPI responses to supply-led policies and demand-led policies differently but the magnitude of response is significant. This suggests that all housing policies impact the PPPI movements in a similar fashion. Furthermore, PPPI also responses to initial shocks of most macroeconomic factors.