WEALTH REDISTRIBUTION EFFECTS OF MUP AND HIP ON HDB RESALE PRICE

Abstract

Purpose – This paper examines the impact of Main Upgrading Programme (MUP) and Home Improvement Programme (HIP) on HDB resale prices quantitatively. Housing is an avenue for wealth redistribution. Government surplus is redistributed back to the society through the provision of subsidised housing upgrading to boost the housing values. Comparison on the impacts of MUP and HIP is made based on their magnitude of price increments in HDB resale prices, and their ratio of price increments after taking into consideration upgrading costs. This paper hopes to examine these items empirically. Methodology – Difference-in-Differences (DID) is adopted to analyse the quantitative impact of MUP and HIP on HDB resale transactions within various housing towns/estates. Findings – Evidence has shown that MUP and HIP have generated price increments in HDB resale prices. Further analysis carried out within the same housing town/ estate and timeframe has found that MUP has generated a larger price increment of 8.89 percent in HDB resale prices than that of HIP at only 4.47 percent. However, should the costs of upgrading be considered, HIP is more effective than MUP in redistributing wealth. This is evident from the significant difference between the ratio of price increment of HIP and that of MUP, which averages at 18.3 and 2.18 respectively. Contribution – To the author’s best knowledge, there are limited studies done on the quantitative effects of MUP and HIP. Results and analysis from this paper will provide great insights on the wealth redistribution effects of MUP and HIP within various housing towns/ estate. This will be crucial for policymakers in reviewing housing policies and for HDB households to making right decisions on their flats upgrading. Keywords: Main upgrading programme, Home improvement programme, HDB flats, cost of upgrading, housing towns/estate, maintenance, deterioration