HDB'S PRICING STRATEGY FOR NEW PUBLIC HOUSING: THE PERSPECTIVE OF VALUING PRIVACY

Abstract

Singapore has often prided itself for providing affordable, quality housing for over 60 years. With close to 80% of the population living in Housing and Development Board (HDB) flats, affordability continues to be the topic of interest for current and future generation of Singaporeans. Thus, an understanding on HDB’s pricing strategy would prove useful for aspiring homeowners in making more informed choices in selecting their homes.

While the Ministry of National Development (MND) has clarified the measures undertaken to keep prices affordable, such as providing subsidies and housing grants to homeowners, it is still unclear how HDB flats are priced with regard to different structural, locational and neighbourhood attributes. The objective of this paper would therefore be to understand the relationship between these attributes and the prices of flats sold by HDB, or Build-to-Order (BTO) Flats. However, where there have been numerous research highlighting the effects of different attributes, this paper focuses on an aspect of liveability that may have been compromised in high-density cities, which is the value of privacy.

The Hedonic Pricing Model (HPM) was utilised in this paper, investigating a sample size of over 2,000 BTO Flats and their respective housing attributes on the price, especially those concerning privacy. It was found that units that would enjoy greater privacy would see a premium of 0.7%, and that each additional unit sharing the same floor would reduce prices by 0.3%.