ANALYZING THE DEMAND FACTORS FOR PUBLIC HOUSING IN SINGAPORE : A COMPARISON BETWEEN THE BUILT TO ORDER AND RESALE AVENUE

Abstract

The issue of housing the population in the public sector of Singapore is a challenging problem faced by the government due to land scarcity issues. Homebuyers on the other hand are torn in between two prominent housing schemes namely through direct and indirect purchase. In the recent urbanization landscape of Singapore for housing sector, the Housing Development Board (HDB) has formulated a new flat programme, the Built To Order or BTO scheme, that offer flexibility in timing and location for owners buying new HDB flats. This dissertation examines the factors placed into consideration by homebuyers upon deciding which scheme best suits their preferences. Singapore’s demographic trends in housing mobility, population, household income and marriages were analyzed in the research section to highlight its effect on the demand for housings in Singapore. It was found that Singapore had undergone various changes and shifts in its demographic trends over time. External global events such as the 1997 financial crisis that would lead to financial difficulty had major effect on various industries including the public housing sector in Singapore. The Built To Order scheme is a direct purchase scheme which is designed to be demand responsive in that developments are only approved when there is sufficient take up rate. The subsidies provided by the government have also made BTO unit prices more affordable than resale flat units. Through a survey of 497 respondents obtained from flat owners in Sengkang however, showed that affordability was not the only factor that drove them into selecting which scheme is best sought for. Hence a regression model was formulated to identify other pertaining factors that would lead to the decision of either scheme. The first hypothesis proposing that BTO being an affordable avenue is the best choice of selection was deduced to be invalid. Other interrelated variables such as strong reliance on housing agents and real estate companies had effects on the decision making of either scheme. The second hypothesis of addressing homebuyers driven by demand that are not satisfied by BTO developments may create a hurdle for the progress of future BTO developments was formulated. The validity of this analysis was supported by a second regression model and in assessing the demand factor by the respondents; it was further analyzed that the provision of more BTO developments would shift the decision towards BTO scheme. Hence the second hypothesis holds true. In conclusion, the analysis conducted in this research provides a better discussion with regards to the decision making process of public homebuyers in Singapore. The dissertation further highlights the limitations of the research and finally, recommendations are suggested for further studies.