HDB FLATS-EXAMINING THE INVESTMENT POTENTIAL OF PUBLIC HOUSING IN SINGAPORE

Abstract

The lifelong dream of most Singaporeans is to own a home and this investment will be the single largest investment one ever makes. In land-scarce Singapore, an overwhelming majority of the population is housed in flats provided by the public housing authority. Public housing is both a symbol of national development and has been one of the major instruments employed by the People's Action Party (PAP) government to promote the development of a sense of national identity among Singaporeans. With the economy improving and gaining momentum in the last few years, the prices of HDB flats has gone in tandem with the growing affluence of the population. This paper seeks to provide a comprehensive analysis of the total returns of HDB tlats by their locations and house types based on the data in 2006. In particular, the total returns of HDB tlats will be broken down into their capital gains and rental yields for analysis. The results of this paper showed that there is indeed investment potential in HDB flats. The average returns of 10.8% coupled with its perceived low risks and ability to hedge against inflation further enhance the attractiveness of HDB flats. By house types and locations, the results also tallied with previous research and current demographic trends. This paper thus provides an affirmation of the investment potential of HDB flats. The results will be useful to those who seek to understand the financial aspects of public housing in Singapore.