THE INFLUENCE OF MARKET OPTIMISM ON CONDOMINIUM DEMAND

Abstract

Owning a home of their own is the dream of many Singaporean households; and when the economy is in an upswing, home seekers will begin to have higher housing aspirations. More households aspire to own private properties, not just for occupation, but also for investment purposes. Fuelled by excessive media reports on the recent spate of soaring prices in luxurious condominiums, condominium demand in the mass and mid-tier market has also picked up rapidly. However, as purchasing condominiums involve significant capital outlay, having a better understanding of home seekers perceptions and behaviors is very important. This paper will investigate the types of home seekers present; their perceptions and sentiments towards the property market; as well as the factors motivating them to purchase condominiums. An interview survey was conducted; after which the results were tested with a series of statistical methods from the Statistical Package for Social Sciences (SPSS). The study found that many home seekers are somewhat influenced by the excitement and sentiments in the current market rebound. A considerable number of investors and speculators are also present. Non-fundamentals factors such as confidence in the housing market and expectations of further price increases are found to be significantly important in individuals' purchasing decisions at the moment. This implies that to some extent, housing demand could be led by irrational behaviors and a risk of a future housing bubble exists. With a better understanding of home seekers behaviors and attitudes, policy makers can take precautions to prevent the bubble from forming; while developers can draw on this market optimism to sell their projects.