IMPACT OF MACROECONOMIC VARIABLES ON HDB RESALE FLAT PRICES

Abstract

Singapore has one of the highest home ownership in the world. 82% of the population own and live in Housing Development Board (HDB) flats. The sheer size of the HDB flats ownership has created an actively transacted HDB flats resale market. Statistical figures reflect that total savings committed to HDB flats occupy a huge proportion of the national savings and wealth. Over the past 10 years, the local government has further liberalized the HDB resale market, making it function more like the open market. The resultant of recent years of policy liberalization also means resale prices are now subject to changes in the general economic conditions. Hence, this study is an attempt to discover the influence that macroeconomic variables can bring about to HDB resale flat prices. This study aims to examine the influence of selected macroeconomic variables on the movement of HDB resale flat prices. It has the wider implication of predicting future resale flat prices, hence cautioning against huge price swings, which may coincides with the timing of implementing policies. The econometric analysis is done using Multiple Regression Analysis, using HDB resale prices as the dependent variable and the independent variables are Private Property Price, Gross Domestic Product, Inflation, Unemployment Rate and Interbank Rates. Statistical tests show that only Gross Domestic Product and Inflation are significant to changes in resale prices.