INFLUENCE OF REAL ESTATE AGENTS ON THE HOUSING MARKET

Abstract

This paper studies the influence of real estate agents on the housing market, specifically on public housing prices in Singapore. By merging available different datasets on transaction records and running hedonic regression analyses, the study looks at the impact of real estate agents on public housing prices across Singapore between 2017 and 2021, differentiating the effects brought about by agents who represent sellers and buyers, and also whether the experience an agent has matters. The results found that contrary to most existing literature, there is an inverse relationship between the number of resale transactions by agents and public housing prices. A robustness analysis was carried out and the result is robust across all planning regions in Singapore, across most periods. There is also an inverse relationship between the number of resale transactions by agents representing the sellers and public housing prices; and a positive relationship between the number of resale transactions by agents representing the buyers and public housing prices. On the other hand, consistent with previous studies, agents who are more experienced are better able to serve the interests of their clients. Experienced agents who represent the sellers and buyers can transact at higher and lower prices respectively when compared to less experienced agents. The findings seem to suggest a potential principal-agent problem where real estate agents are incentivized to close the deal and to be paid commission quickly rather than to ensure that their clients have gotten the best possible deal.