THE MARKET STRUCTURE OF REAL ESTATE AGENCY SERVICES IN SINGAPORE

Abstract

The emergence of new and more efficient ways to facilitate property transactions in recent years has disrupted the real estate agency industry in Singapore although their economic impacts remain unclear. This study examines industrial organization issues pertaining to the current market structure of the real estate agency industry and in Singapore.

Based on past studies, we adopt the Structure-Conduct-Performance (SCP) framework for analyzing the industrial organization and various characteristics that include, market structure, pricing strategies and efficiency levels. While both private and public housing sectors are studied, our empirical work focuses on agency services in the latter over the 2017 to 2019 period due to data availability.

Three different concentration indexes were computed to identify market structure: the concentration ratio, the Herfindahl-Hirschman Index (HHI), and the Lerner Index. They show a high degree of market concentration in the real estate agency industry.

The result shows that real estate agencies in Singapore are concentrated and do hold significant market power. While this alone does not indicate a definite market structure, other characteristics observed in the market coupled with significant market power seems to imply that the real estate agency market in Singapore is monopolistic competitive. By examining the market structure, we were able to identify the market inefficiencies and the consequences these inefficiencies have on society.