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A Constant-quality Price Index for Resale Public Housing Flats in Singapore

Author

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  • Seow Eng Ong

    (Department of Real Estate, National University of Singapore, 4 Architecture Drive, Singapore 117556, seong@nus.edu.sg)

  • Kim Hin David Ho

    (Department of Real Estate, National University of Singapore, 4 Architecture Drive, Singapore 117556, rsthkhd@nus.edu.sg.)

  • Chai Hoon Lim

    (CapitaLand Limited, Singapore, rissa@singnet.com.sg.)

Abstract

Largely because of the significant societal and economic aspects of public housing in Singapore, the current resale price index is published regularly by the Housing and Development Board (HDB). Based on average transaction prices, this HDB index does not control for a shift in the mix of public housing resale flats transacted. This paper looks into the usefulness of the current HDB resale price index that is reflective of pure price appreciation across time. Adopting the varying parameter technique, a constant-quality HDB resale price index is constructed instead for the period between January 1997 and June 2000. The usefulness of a constant-quality resale price index is evaluated using three assessment criteria. First, through a series of comparative studies between a constant-quality HDB resale price index and other resale price indices, it is found that the constant-quality resale price index provides a better indication of pure price appreciation. Secondly, the parameters of price determinants are found to be unstable across distinct phases of the market cycle. During market recovery, greater premiums are generally attainable for better-quality flats due to positive market sentiment and improved economic conditions. Nevertheless, greater discounts are also generally attainable for lower-quality flats due to greater expectation attributable to rising resale prices. This implies that owners of better-quality flats would probably be better motivated to put up their units for sale during a market recovery. Thirdly, the difference in the values of price determinants during different phases of the market cycle suggests that the varying parameter techniques should be appropriate for the construction of a constant-quality HDB resale price index.

Suggested Citation

  • Seow Eng Ong & Kim Hin David Ho & Chai Hoon Lim, 2003. "A Constant-quality Price Index for Resale Public Housing Flats in Singapore," Urban Studies, Urban Studies Journal Limited, vol. 40(13), pages 2705-2729, December.
  • Handle: RePEc:sae:urbstu:v:40:y:2003:i:13:p:2705-2729
    DOI: 10.1080/0042098032000146858
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    References listed on IDEAS

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    Cited by:

    1. Iqbal A. Syed & Jan De Haan, 2017. "Age, Time, Vintage, And Price Indexes: Measuring The Depreciation Pattern Of Houses," Economic Inquiry, Western Economic Association International, vol. 55(1), pages 580-600, January.
    2. Sam Il Myoung Hwang & Leo Ma, 2023. "Top‐floor discounts in residential buildings: Evidence from South Korea," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 51(2), pages 441-469, March.
    3. Ansgar Belke & Jonas Keil, 2018. "Fundamental Determinants of Real Estate Prices: A Panel Study of German Regions," International Advances in Economic Research, Springer;International Atlantic Economic Society, vol. 24(1), pages 25-45, February.
    4. Gang-Zhi Fan & Seow Eng Ong & Hian Chye Koh, 2006. "Determinants of House Price: A Decision Tree Approach," Urban Studies, Urban Studies Journal Limited, vol. 43(12), pages 2301-2315, November.
    5. Wei Lin & Zhentao Shi & Yishu Wang & Ting Hin Yan, 2023. "Unfolding Beijing in a Hedonic Way," Computational Economics, Springer;Society for Computational Economics, vol. 61(1), pages 317-340, January.
    6. Chia, Liu Ee & Sing, Tien Foo, 2023. "Redevelopment values in multi-family properties: Evidence from en bloc sales in Singapore," Journal of Housing Economics, Elsevier, vol. 60(C).
    7. Poh Har Neo & Seow Eng Ong & Yong Tu, 2008. "Buyer Exuberance and Price Premium," Urban Studies, Urban Studies Journal Limited, vol. 45(2), pages 331-345, February.

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