PRICE DYNAMICS OF DIFFERENT PUBLIC HOUSING SUBMARKETS

Abstract

This paper explores the variations in the housing returns of Singapore’s public residential segment. The three objectives of this study are mainly - to establish individual submarket’s excess returns relative to the market, to discover the varying effects of neighborhood characteristics and to reveal the locational impact on housing’s excess returns. The hedonic regression methodology was adopted for this study, which comprised of the public resale transaction data across the 14-year study period.

Out of the three public submarkets (3, 4, 5 Room), the 3 Room submarket is deemed the best submarket across the study period based on the highest mean excess returns from the market. In addition, 2003 seemed to be a turning point for all submarkets when their performances swing to the opposite direction.

Out of the 15 distance variables, elevated MRT station was identified the amenity with the greatest premium attached to it.

In addition, districts 7, 15 and 1 are ranked top three districts. All three districts are centrally located especially district 1 (Raffles Place), which is in the heart of the Central Business District. However, results also indicated that district 12 (Toa Payoh) is the best performing district based on quantum of sales. Since all the mentioned districts are located in the central region, therefore this study postulates that flats in the central region can anticipate better housing returns.

All in all, the findings of this study had successfully proven that variability exists in the returns of public residential properties within a city. Future research could establish different submarket returns in the private residential segment and use it as a coherent comparison with the findings of this paper. Reasons contributing to the divergence in the housing returns can also be explored.