LIFT UPGRADING PROGRAMME IN HOUSING DEVELOPMENT BOARD : AN EVALUATION OF PRICE INCREMENT

Abstract

The Lift Upgrading Programme (LUP) is an upgrading project launched in 2001 to provide greater convenience to its residents. It has been evaluated qualitatively but not quantitatively. This dissertation suggests a methodology to evaluate the impact of lift upgrading on the transacted value of public housing in Singapore. A sample of 9,965 resale transactions spanning from January 2001 to December 2007 was drawn to determine the relationship between transacted prices and the presence of lifts for HDB resale blocks. The effect of lift presence is evaluated using 2 approaches. The first approach uses a hedonic price model to analyse the effect of lift upgrading in 3 stages. Firstly, transactions done after polling received an increase in price from 0.1% to 0.6%. Secondly, transactions done during construction received a decrease in price from 0.5% to 1.2%. Thirdly, transactions done after construction increased the price by 0.1% to 0.7%. There is no relationship between lift presence and the difference in floor landings, age of blocks and percentage of residents aged 30 to 39 and above 65 years old. The second approach uses repeat sales method. The signs of the coefficients for transactions after polling and transactions during construction are line with the findings for hedonic price model. However, no inferences can be made because the coefficients are statistically insignificant. Although the magnitude of coefficients for lift upgrading is less than 1%, it has several impacts. This research benefits home owners since lift upgrading brings small price appreciation after polling and after construction. Home seekers may choose to purchase units during construction stage for a small price discount. Finally, policy makers and researchers should factor in quality change when using Resale Price Indices from the Housing Development Board.