ANALYSIS OF PRIVATE RESIDENTIAL PROPERTY PRICE INDICES IN SINGAPORE

Abstract

The property price index serves as an effective reference point for home buyers and investors in making sale and purchase decisions. There are three established property price indices in Singapore, which are published by the Urban Redevelopment Authority, the Singapore Real Estate Exchange and the Institute of Real Estate Studies at the National University of Singapore. These three PPIs have revealed discrepancies in the eight rounds of cooling measures targeted at the private residential market between 2010 – 2013. Various industry experts have consequently expressed concerns about the underrepresented decline in property prices, as indicated by the PPIs over the last five years. This paper seeks to explicate these three price indices in detail, and investigate if the discrepancies reported were the effect of macro-prudential policies. Using the segmented regression analysis of interrupted time series, findings for the ‘island wide sub-index’, ‘core central region sub-index’ and ‘rest of central region sub-index’ consistently revealed that the deviations were in fact largely accounted for by the implementation of said macro-prudential policies. Nevertheless, close examination of the ‘outside central region sub-index’ re-affirmed the robustness of the three property price indices despite their less than accurate results. This study ultimately aims, in this regard, to identify the strengths and weakness of each index’s dual-possession, guide property price index users in making informed decisions, and form bases for future revision of the indices.