IMPACT OF HOME IMPROVEMENT PROGRAMME (HIP) ON THE TRANSACTION PRICES

Abstract

Over the years, the mass construction of public housing to meet growing housing needs have transformed Singapore’s residential landscape. However, as the Housing Development Board (HDB) flats built in the early 1960s start to age, programmes were formulated to aid in the improvement works such as the Main Upgrading Programme (MUP), which was then replaced by the Home Improvement Programme (HIP) in 2007. The main purpose of HIP is to help resolve maintenance problems as well as to increase or retain the value of the HDB flat. However, depreciation of price is still a concern. Despite having some studies on various upgrading programmes, none of the studies analyses the effects of HIP on HDB resale prices. As the government is planning to implement HIP II in 10 years’ time, this paper aims to fill in the literature by examining the effect of the current HIP on HDB resale prices and also discusses the possible implications of the results. Through the different model specifications and the information available from the Singapore Government Database from 2007 to 2018, an investigation was conducted to evaluate the impact of HIP on the HDB resale prices. This led to two main findings. First, the completion of HIP does have a positive impact on the HDB resale prices. Second, the completion of HIP will help to reduce the depreciation rate of the housing units. All in all, this concludes that HIP is effective in achieving its purpose to increase and retain the housing value of public housing thus exhibiting viability for the government to execute HIP II.