Please use this identifier to cite or link to this item: https://scholarbank.nus.edu.sg/handle/10635/222543
Title: PRICE MOVEMENTS OF PRIVATISED EXECUTIVE CONDOMINIUMS AGAINST PRIVATE CONDOMINIUMS
Authors: NUR HENDRIYANTY HIDAYAH BINTE AHMAD
Keywords: Real Estate
SDE
Cheng Fook Jam
Executive Condominium
Price Movements
Private Condominium
Hedonic Regression
RE
2013/2014 RE
Issue Date: 7-May-2014
Citation: NUR HENDRIYANTY HIDAYAH BINTE AHMAD (2014-05-07). PRICE MOVEMENTS OF PRIVATISED EXECUTIVE CONDOMINIUMS AGAINST PRIVATE CONDOMINIUMS. ScholarBank@NUS Repository.
Abstract: Unlike private housing, Executive Condominiums (EC) as quasi-public housing to meet the accommodation needs of the sandwiched middle class are subjected to resale restrictions. EC owners, after fulfilling the 5-year-owner-occupation period, are permitted to resell their properties in the open market but only to citizens and permanent residents during the 6th to the 10th year (Semi-Privatised Period 1). The said resale restriction is completely lifted from the 11th year onwards (Fully-Privatised Period 2), whereby ECs are also open to purchase by foreigners and corporate bodies. This study investigates and compares the price movements of ECs during Period 1 with that in Period 2. It also compares the price movements of ECs during Period 2 with those of comparable Private Condominiums (PC). The baseline hypothesis is that a relaxation of resale restriction in Period 2 will widen the pool of potential buyers and hence will trigger a higher rate of capital appreciation relative to that in Period 1. The other related issue is whether there will be a convergence in prices between ECs and comparable PCs in Period 2. The hypotheses are investigated via the construction of hedonic price indices of 4 EC projects and 4 other comparable PC projects. The data for the study comprises 1,675 resale transactions from 4 EC projects and 1,422 resale transactions from 4 comparable PC projects spanning from Quarter 4 of 2005 to Quarter 4 of 2013. An analysis of the 4 pairs of hedonic price indices yields the following findings: • The average quarterly percentage change in EC prices for Period 2 (Fully-Privatised) is greater than that of Period 1 (Semi-Privatised). This result is in conformity with the prior expectations about the positive impact of de-regulation on prices. • The average quarterly price ($ per sq m of floor area) of ECs in Period 2 did not converge or surpass that of the PCs. • The quarterly percentage changes in EC prices in both Period 1 and Period 2 exceed that of the corresponding ones of the overall URA Price Index for Condominiums. This could account for the positive responses to new EC launches during the past 2 years and the perception that ECs also constitute a good investment in terms of potential capital appreciation.
URI: https://scholarbank.nus.edu.sg/handle/10635/222543
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