EXPLORING THE WEALTH REDISTRIBUTION EFFECTS OF EXECUTIVE CONDOMINIUMS: A STUDY ON THE PRICE DIFFERENTIALS BETWEEN EXECUTIVE CONDOMINIUMS AND PRIVATE CONDOMINIUMS

Abstract

The Executive Condominium Housing Scheme was introduced in 1996 with the aim of providing quality housing meant to approximate that of private condominiums (PCs) at affordable prices to middle-income groups. This was also viewed as a means of wealth redistribution with EC purchasers being able to capitalise on the initial price discount if the units are sold for higher values in the secondary market. However, EC owners are only able to sell and rent out their units when temporary property rights restrictions are lifted in stages after 5 and 10 years.

There exist several concerns surrounding the EC Housing Scheme particularly with regards to the investment value of EC units as well as the justifiability of subsidies being provided. This paper will seek to explore and address these concerns by empirically analysing the price differentials between ECs and PCs over time, from the point of launch and following the lifting of rights restrictions. Using Difference in Differences (DID) regression, this study quantifies the magnitude of capital gains EC purchasers enjoy by comparing the prices of ECs before and after the lifting of rights restrictions against PC prices.

The outcome of this study revealed that EC owners did enjoy increases in the market value of their homes. EC units experienced a 10.2% and 14.9% increase in market value from initial sale prices following the partial and lifting of property rights restrictions after 5 years and 10 years respectively.