THE IMPACT OF MACROECONOMIC FACTORS ON THE SINGAPORE PRIVATE RESIDENTIAL MARKET

Abstract

This thesis explores the relationship between Singapore's private residential housing prices and macroeconomic factors namely, unemployment rate, China's economic policy uncertainty index (EPU), stock market performance index, amount of household loan issuance and gross national product (GDP). This paper focus on Central, West and North region of Singapore and the market in each region was further split into different price ranges to capture the full spectrum across different segments of the market. West and North regions are acting similar to Central region due to the development of regional centres. This paper found that level of personal loans and unemployment rate have insignificant impact on housing prices while EPU, level of shares and securities and GDP have different level of significant impact on different regions which shows that different nature of the regions plays a part in the level of impact by these macroeconomic factors. This paper also established the significance of foreign presence in Singapore's private residential market. Buyers from China (Top foreign buyers) favour suburban housing and the paper suggests that their maximum budget for Singapore housing is between $7000 - $7400 per square meter. This paper highlights the significant investment aspect of Singapore housing which makes it susceptible to macroeconomic changes especially to level of shares and securities. This paper also provides some policy recommendation based on its findings.