Policy-makers often impose some cooling measures on the housing market when housing prices rise fast. Such policies yield limited success if housing prices are driven up by fundamentals. Estimating a fundamental price trend from observed price data is a challenge. We present an empirical methodology to separate housing price trends into fundamental and affordable components. Deviating from the common practice, we replace current income by a long-run income measure constructed from household incomes at different quantiles. This income measure provides a more suitable basis for constructing affordable house price levels. It also serves as a better fundamental variable, especially for segmented housing markets like that of Singapore. These price trends provide policy-makers with useful information to intervene into property markets to achieve desirable outcomes. Analysing Singapore data using this methodology shows the magnitudes of the price gaps between actual and fundamental prices and how housing...

Estimating fundamental and affordable housing price trends: a study based on Singapore

When natives meet immigrants in public and private housing markets

Public and private housing markets dynamics in Singapore: The role of fundamentals

Globalization enables foreign liquidity to access and affect the local real estate market. Concerning Singapore, this paper depicts a strong connection between foreigners’ property acquisitions and regional house price movements. Examining structural break points, it illustrates a ripple effect of prices from central locations to suburbs. A structural vector autoregressive model incorporates these two observations, and the impulse responses and variance decompositions attribute 35% fluctuation of house price growth in the central region and 25% in the non-central region to the shocks to foreigners’ buying activities in central locations. Thus, foreign liquidity to real estate also largely affects the suburban market, even though foreign buyers are inactive there. As governments now often consider implementing policy shocks to influence on foreigners’ buying activities to impact the housing markets, this paper’s findings have useful implications on policy effectiveness.

Foreign Liquidity and Ripple Effect to Singapore Housing Market

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Foreign Liquidity and Ripple Effect to Singapore Housing Market