HOUSEHOLDS' PERCEPTIONS AND EXPECTATIONS ON PRIVATE HOUSING PRICES IN SINGAPORE

Abstract

The ultimate dream of most Singaporeans is to possess a private residential property. To many, the ownership of a private property represents prestige, reputation and a certain level on the social ladder. Many also see private residential property as a good source of investment, being able to reap high yields in the long run. A private home purchase involves significant capital outlay and so, an understanding of movements in private home prices will be of interest to potential homebuyers, real estate developers, marketing agents and relevant authorities. This paper researched the determinants of private housing prices from another perspective, deviating from the traditional economic approach. The psychological aspect of potential homebuyers was examined to provide a thorough explanation on how people decide on a home purchase. In particular, their attitudes, perceptions and mindsets regarding private housing prices were analyzed. The results of this dissertation tallied with previous research on behavioral finance. Fundamental factors such as income level, interest rate and employment growth rate could not exclusively account for housing price changes. Non-fundamental factors such as expectation of future price appreciation could affect households' home purchase decision, and in turn affect housing prices. This study thus provides a better rationalization that the psychological aspects of potential buyers are significant determinants of housing prices. This result would be useful to those who seek to understand better private housing price trends in Singapore.