EFFECT OF MAINTENANCE FEES ON HOUSING PRICES IN SINGAPORE'S PRIVATE CONDOMINIUM MARKET

Abstract

This research study serves as the first paper to understand the effect of Maintenance Fees (MF) on housing prices in Singapore's Private Condominiums (PC). It adds insights to the lack of research studies concerning MF in PC. MF plays an important role in the sustainability of a PC as these fees amount to a huge overhead cost that the homeowners have to bear which is spread out throughout the PC’s life cycle. It is therefore significant to study whether a higher MF translates into higher housing prices, which in the long run, aids both the developers in the estimation of the MF and the homeowners’ purchase decision. The research methodologies being used involve both quantitative and quantitative methods, with the first three regression models being used to test for the significant determinants of the MF. Thereafter, the predicted MF value obtained from the best fitted regression model would then be used as the main independent variable in the hedonic pricing model containing the next three regression models to gain an in-depth understanding of the relationship between MF and housing prices. Regression results show that there is a statistically significant relationship between MF/Low MF and housing prices. To further investigate the reasons underlying the results, an interview was conducted for two residents living in two separate PC used in the dataset. Findings suggest that the quality of service provided by the Managing Agent (MA) backed by an active Management Committee (MC) may likely be the most important factor in affecting the long term MF of the PC as advising on appropriate maintenance works can reduce long term cost by minimizing damage on a recurring basis.