AN EMPIRICAL RESEARCH ON HOUSING PRICE DYNAMICS IN SINGAPORE

Abstract

Residential property price is always a major concern among Singaporeans. Without a property, people can hardly feel a deep rootedness in the society they live in. The Singapore government has also been emphasizing the importance of maintaining a sustainable and stable housing market. Housing price dynamics and price controlling measures has primarily been based on the Urban Redevelopment Authority property price index at national and regional level. Little information about the pricing dynamics at lower aggregate level has been provided. This paper therefore aims to explore Singapore’s housing price dynamics at planning area level from the perspective of hedonic pricing model. The methodology of this paper involves the construction of constant quality price index using micro transactions obtained from Real Estate Information System and spatial econometrics techniques to resolve spatial autocorrelation in the data in order to present accurate pricing dynamics. There are three important findings. First, from the hedonic price indices, location variables have considerably big impact on private housing prices and the impacts are different to condominiums and apartments. Second, housing price dynamics at planning area level differ largely from one another and from the national or planning regional level, advocating the need of control of property prices in certain areas. Last, spatial autocorrelation is proven to exist in the data and it affects the accuracy of hedonic pricing model. Thus, government should not only look into pricing dynamics at smaller scale but also find a more appropriate pricing model to eliminate the spatial dependency.