Evaluating Singapore’s Housing Policies: A Bounds Testing Approach

The Singapore housing market is unusual in the dominance of privately-owned government-built housing coexisting with openness to foreign investments in the private housing sector. Recent rapid population increases in a low interest rate and high global liquidity environment has resulted in accelerat...

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Main Authors: LEE, David Kuo Chuen, XIE, Taojun
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Language:English
Published: Institutional Knowledge at Singapore Management University 2015
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Online Access:https://ink.library.smu.edu.sg/lkcsb_research/4869
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spelling sg-smu-ink.lkcsb_research-58682016-01-27T08:54:07Z Evaluating Singapore’s Housing Policies: A Bounds Testing Approach LEE, David Kuo Chuen, XIE, Taojun The Singapore housing market is unusual in the dominance of privately-owned government-built housing coexisting with openness to foreign investments in the private housing sector. Recent rapid population increases in a low interest rate and high global liquidity environment has resulted in accelerated house prices increases in Singapore. The Singapore government responded with several consecutive rounds of measures to stabilize housing prices. This provides a unique opportunity to study the degree of success of various government measures to maintain house price stability. In this paper, we first construct a set of indices for the government‘s cumulative efforts in stabilizing the housing market, following Zhang and Zoli (2014) and based on the government policy statements from June 1981 to December 2013. We then test for cointegrating relationships between the housing policies vis-à-vis property price, transaction volume and sales value using Pesaran (2001) bounds test for cointegration. Our findings are as follows. First, Singapore‘s housing policy has significant counter-cyclical impacts on property transaction volume and sales values in both the long-run and the short-run. Second, cooling measures initiated in September 2009 have been effective at least in the short-run horizon. Third, different types of housing policy have different effectiveness: debt-to-income ratio measures are effective in the long-run, while capital gain tax, loan-to-value ratio and Central Provident Fund measures are effective in the short-run horizon. 2015-08-07T07:00:00Z text https://ink.library.smu.edu.sg/lkcsb_research/4869 Research Collection Lee Kong Chian School Of Business eng Institutional Knowledge at Singapore Management University Asian Studies Finance and Financial Management Real Estate
institution Singapore Management University
building SMU Libraries
continent Asia
country Singapore
Singapore
content_provider SMU Libraries
collection InK@SMU
language English
topic Asian Studies
Finance and Financial Management
Real Estate
spellingShingle Asian Studies
Finance and Financial Management
Real Estate
LEE, David Kuo Chuen,
XIE, Taojun
Evaluating Singapore’s Housing Policies: A Bounds Testing Approach
description The Singapore housing market is unusual in the dominance of privately-owned government-built housing coexisting with openness to foreign investments in the private housing sector. Recent rapid population increases in a low interest rate and high global liquidity environment has resulted in accelerated house prices increases in Singapore. The Singapore government responded with several consecutive rounds of measures to stabilize housing prices. This provides a unique opportunity to study the degree of success of various government measures to maintain house price stability. In this paper, we first construct a set of indices for the government‘s cumulative efforts in stabilizing the housing market, following Zhang and Zoli (2014) and based on the government policy statements from June 1981 to December 2013. We then test for cointegrating relationships between the housing policies vis-à-vis property price, transaction volume and sales value using Pesaran (2001) bounds test for cointegration. Our findings are as follows. First, Singapore‘s housing policy has significant counter-cyclical impacts on property transaction volume and sales values in both the long-run and the short-run. Second, cooling measures initiated in September 2009 have been effective at least in the short-run horizon. Third, different types of housing policy have different effectiveness: debt-to-income ratio measures are effective in the long-run, while capital gain tax, loan-to-value ratio and Central Provident Fund measures are effective in the short-run horizon.
format text
author LEE, David Kuo Chuen,
XIE, Taojun
author_facet LEE, David Kuo Chuen,
XIE, Taojun
author_sort LEE, David Kuo Chuen,
title Evaluating Singapore’s Housing Policies: A Bounds Testing Approach
title_short Evaluating Singapore’s Housing Policies: A Bounds Testing Approach
title_full Evaluating Singapore’s Housing Policies: A Bounds Testing Approach
title_fullStr Evaluating Singapore’s Housing Policies: A Bounds Testing Approach
title_full_unstemmed Evaluating Singapore’s Housing Policies: A Bounds Testing Approach
title_sort evaluating singapore’s housing policies: a bounds testing approach
publisher Institutional Knowledge at Singapore Management University
publishDate 2015
url https://ink.library.smu.edu.sg/lkcsb_research/4869
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