The Housing Market Of Singapore

Published Date: 02 Nov 2017

Cities are engines of growth. With more than half the world’s population now living in cities and increasing, this will exert enormous pressure on housing, services, infrastructure and the environment. Like many other cities, Singapore faced similar urban challenges. Singapore is an island city state of just 700 sq km with virtually no natural resources. The nation state required to pack in all the needs of a country and accommodate some 5 million people within the island (Cheong Koon Hean, 2010).

Singapore adopts a long term and comprehensive approach to planning. It starts with

formulating the Concept Plan, a strategic land use and transportation plan that sets the longterm

development directions for Singapore over the next four to five decades. This strategic

plan is cascaded into a Master Plan with a shorter 15 year time frame. The Master Plan

provides clear planning parameters to guide developments and help prioritise investments in

public infrastructure (Cheong Koon Hean, 2010). Despite Singapore government has been

planning decades ahead, the country is facing the unbalanced housing supply and demand

during pass decade.

Housing is one of man’s most basic needs. Yet in many countries, decent housing is beyond

the reach of many. When the HDB was formed in 1960, its pressing challenge then was to

solve the huge housing shortage for Singaporeans. 50 years on, HDB has succeeded

beyond expectations and received numerous international accolades for its achievements.

However, determining the right housing supply for the short term will always be a difficult call,

and need to strike a delicate balance. Economic conditions and sentiments can change

much faster than any building plan. So, while planning the housing supply to broadly meet

longer term needs, there is also a need to build in some buffer to deal with short-term

fluctuations (Mah Bow Tan, 2010). Therefore, Singapore government needs the solution to

stabilize housing supply and demand while maintaining the growth of the country.

In Singapore, home ownership is well segmented into private homeowners and public

homeowners. The public home ownership sector is the dominating sector accommodating

85% of total households (Housing and Development Board, 2002).

During the past four decades, along with Singapore’s rapid economic expansion, major

structural changes are evident in the country’s demography strata as well as economic

framework. The nature, provision and financing of housing are therefore products of such

socio-economic development. For instance, the housing tenure structure has undergone

drastic structural changes since 1970. Public homeownership has become a major sector

while the private rental sector, which used to be the dominating sector, has become very

diminutive in the current tenure structure (United Nations Human Settlements Programme

2011).

The public housing sector in Singapore is managed by a statutory board known as the HDB

(Housing Development Board) who is sole authority to control and implement public housing

production and management initiatives, subsidies and financing measures as well as specific

programs and policies. The public homeownership sector is divided into three sub-markets,

namely, the new public housing market, the resale public housing market, and the Executive

Condominium market.

While the new and resale public housing markets target the low and middle-income

households, the Executive Condominium market aims to provide high quality condominium

housing for the upper and middle-income households. Although the dwellings within the three

sub-markets are constructed similarly in high-rise high-density developments with 99 years

leases, the new and resale public housing are differentiated from each other by the locations,

dwelling sizes, ages and designs, and also from the Executive Condominiums in terms of the

locations, dwelling sizes, ages and designs as well as facilities and amenities.

As HDB has the sole authority and responsibility to provide subsidized public housing, it is

financed through two main types of loans, namely, housing development loans and mortgage

financing loans. The housing development loans are basically to finance the public housing

construction and development programs and operations that are carried out by the HDB. On

the other hand, the mortgage financing loans are loans given to the HDB by the government

so that it could provide mortgage-financing facilities to purchasers of public housing at a

subsidized interest rate.

In terms of the housing market, many researchers have explored it from the perspectives of

demand and supply. The many determinants of housing demand and prices include net

household formation, level of income and real income growth rate, availability of housing

substitutes, price of housing relative to the price of other goods, economic growth rate,

expectation and level of confidence, unemployment rate, stock price index, real after-tax

interest rate, lagged real appreciation, inflation rate, supply of housing, construction cost as

well as the difference between actual and equilibrium real house price levels (United Nations

Human Settlements Programme 2011).

In the early years, HDB adopted a zonal pricing system, where the price of each new flat was

fixed according to geographical zones. Pricing largely took into account the cost incurred in

building the flats and the same price was charged for a given flat type within the zone,

regardless of its actual location and attributes. Back then, there was practically no open

resale market. In our study we tend to adopt a more qualitative approach, housing and

economic policy development, their implications and impact on the housing markets in

Singapore are examined in a series of qualitative discussions.

Another major influence on the housing market is that of government intervention, activity

and influence. In a perfectly competitive economy, the supply of goods and services of the

economy and the set of prices are determined by the price mechanism in accordance with

consumers’ preferences and incomes. However, in reality, markets often operate under

circumstances that do not confine to the assumptions of perfect competitive markets. Left to

the market alone, the market system is unlikely to be efficient. Given the presence of market

failure, governments in most countries have perceived the need to intervene in the markets

and thus correct the market failure or introduce policies or measures to compensate its

effects. The government has actively intervened in the public and private housing markets in

Singapore in several ways that could be categorized in terms of regulations, direct provision,

and subsidies.

Although the current system of public housing operations and financing in Singapore has

been shaped through successive waves of public housing policies and economic

development, its main objective of promoting public homeownership has not changed. The

development and success of the Singapore public homeownership program, which started in

1964, is basically supported by a number of strategic public housing policies and regulations.

The existence of the public housing market in Singapore is the manifestation of the

government’s commitment to provide decent housing for its population. In view of the dire

housing shortage and unsanitary living conditions before the 1960’s, the government has

chosen to directly provide housing through the HDB as this is the most efficient and effective

way to increase the housing stock. HDB plans and construct public housing based on 5-year

building programs. One of the major policies that encourage public homeownership is the

provision of mortgage financing loans by the HDB.

This research will focus on the main and sub-questions to collect primary information and

data according to the research topic.

This main research question is the overall picture of the whole research area and which will

be analysed and defined by sub-questions.

How can Singapore meet the increased demand for housing by the year 2020?

Why doesn’t the Government build more flats?

How can government balance population and housing in Singapore?

What are the factors that affect the supply and the demand for housing?

What strategies can they introduce?

Since the research topic and questions require both statistic and theory, the proposed research method will be mixed-method of quantitative and qualitative. The quantitative method will be used to analyse the information and data from statistic records and qualitative method will provide the analysis of the information from questionnaire which will be distributed to home buyers, developers, contractors, consultants and MPs.

The main objective of the research is to investigate the problems related to unbalanced housing supply and demand so as to understand how to maintain the balance.

This paper will analyse housing supply and demand only within Singapore base on the

knowledge and understanding obtain from collected information and data. Since Singapore

economy is very much depend on the world’s economic trend, there is a limit to forecast the

impact of economy and growth on housing supply and demand. The information and data will

be obtained from published work except the information from questionnaires.

Introduction of the research topic, research questions, research methods, objectives and

limitations of the research.

Review of the literatures which are related to housing supply and demand in Singapore.

Discuss research plan/ case studies and demonstrate the design of a suitable collection

instrument intended to collect primary data for the research.

Provide a short summary of the research topic, the issues identified, and the research

design.

In the previous chapter, the background of the housing supply and demand has been

introduced and highlighted the housing system, market and government interventions which

influence the supply and the demand of housing in Singapore. As currently Singapore

encounter shortage of hosing supply, the research focus to find the solutions on "how can

Singapore meet the increased demand by 2020" despite there is limited land.

The Singapore private housing market has experienced dramatic price movements over the

past 5 years. Traditionally, public housing production and the release of state-owned sites for

private housing have been important policy levers for mitigating house price inflation.

However, imbalances in the housing sector after the Asian Financial Crisis led to cutbacks in

the supply of new public housing units and development land by the state. At about the same

time, Singapore began the liberalization of its financial system and adopted progressively

accommodative immigration policies which increased its attractiveness to capital and

immigrant inflows.

As fundamentals improved amid ample liquidity and as its foreign population grew,

consumption and asset demand for housing expanded rapidly. However, new flat production

and land sales remained curtailed despite revisions to the public housing allocation

mechanism and the state land sale system in 2001 that were intended to improve their

responsiveness to demand shocks. Without a commensurate supply-side response, house

price appreciation in Singapore was among the highest worldwide, both before and after the

Global Financial Crisis. This triggered four consecutive rounds of prudential and fiscal

measures since September 2009 to moderate house price volatility. Their impact has been

muted, attenuated by other drivers of market activity and by a shortage of public and private

housing (Lum Sau Kim, 2011).

Beginning in 2010, the state has aggressively ramped up its supply of public housing and the

quantum of state land sales. While this would reduce the housing deficit in the medium term,

there is an urgent need to address weaknesses in the design and implementation of the

state’s supply levers given the limited effectiveness of prudential measures in an open

economy like Singapore’s.

Singapore Government has been monitoring closely on the supply of housing matter. Mah

Bow Tan (2010) mentioned that as we progressed from a nation of home seekers to home

owners, the situation changed. Demand became more volatile. Many, even those with

existing roofs over their heads, could now easily join or exit the queue. At the height of the

property boom in the mid-90s, there were as many as 150,000 buyers in the queue, and the

wait for a flat was as long as seven years.

However, when the Asian Financial Crisis struck in 1997, the queue vanished, virtually

overnight. HDB ended up with 31,000 unsold flats, which took more than five years to clear.

Because of the unintended oversupply, home buyers could walk in to buy ready flats in the

early 2000s. However, home owners paid a heavy price, with flat prices staying depressed.

Some who bought flats just before the crisis ended up with negative equity and even lost

their homes and hard-earned savings. The many unsold flats represented a waste of

taxpayers’ money. The holding cost incurred was money that could have been spent on

healthcare, education, or other areas.

In order to balance the population and housing supply in Singapore, the Government has

implemented various strategies immigration policy to control the influx of foreigners such as

tighten the requirement of application of Permanent Resident.

And recently MOM (Ministry of Manpower) has taken further measures to moderate demand

for foreign manpower by increasing qualifying salary for the Employment Pass for foreign

professionals to work in Singapore, while applicants would have to commensurate with the

work experience and quality they are expected to bring. Concurrently, educational

qualifications requirements will be tightened.

Besides that, Government also implement measures to control the supply and demand of

housing requirement such as increase supply land sale and building more of BTO (Build To

Order) flats to cater the demand of young generation of Singaporeans who are starting to

form a family.

Furthermore, Singapore government immigration policy on influx of foreign talent and

expertise has been tightened and restricted recently; the demand of housing could be

reduced which make a huge dampen effect.

In order to increase the population size, Singapore government should consider encouraging

cross-marriages between foreign talents and local Singaporeans. Since Singapore is a small

nation in terms of size, the government has been trying to attract the best local and

international talents who are creative and innovative to help develop Singapore further.

In order to balance population and housing, prioritize to strategize on factors that affect

supply and demand for housing.

Given Singapore’s constraints, planning for sustainability is a necessity and a matter of

survival, not a choice. Research on housing supply has grown due to improved data

combined with heightened interest in policies such as local land use regulations.

Singapore is a densely populated city-state. With a 5.18 million population on the 683 square

kilometres, housing need is one of the key social indicators in the country and is well

managed by the Government. Home ownership is an important element of the government’s

housing policy. As recorded in then Prime Minister Lee Kuan Yew’s autobiography: "My

primary preoccupation was to give every citizen a stake in the country and its future. I wanted

a home-owning society."

The Singapore housing market is segmented into three sub-markets: the HDB new flat

market, the HDB resale market and the private residential property market. Public housing

sector, as the dominant sector, accounted for 82% of the total housing stock in 2010. It also

accommodates 82% of the total population. Public home-ownership reached the very high

88.6% by the end of 2011 (Yearbook of Statistics, Singapore 2011). The private residential

property sector, though it accounts for only a small proportion of the total housing stock,

claims almost half of the nation’s housing wealth (Phang, 2001).

Today, 82 percent of Singapore’s population reside in high-rise flats designed and built by

the Housing and Development Board (HDB). Some 92 percent of HDB’s residents own their

apartment units, leaving only eight-percent as tenants.

In Singapore, Housing and Development Board (HDB) is the major provider for homes; it is

the sole authority responsible for physical planning and implementation of public housing

development, and the major developer within the nation, providing affordable lower-income

and middle-income housing for sale or rent , as well as furnishing estate management

services.

As flow of new land is exogenously decided by the government, the author investigated how

a land supply shock affects the housing market. They proposed two hypotheses: (i) Based on

a myopic expectation, a sudden scarcity of expected future land supply reduces new

construction and hence drives up the house price; (ii) Based on a rational expectation, a

sudden scarcity of expected land supply directly alters house prices. A reduction in land

supply induces expectation of higher future rental and land prices. In a rational market, these

anticipations are capitalized into higher current house prices. Under this hypothesis, land

supply should not only enter the supply function, but also the demand function.

The supply of residential units in the pipeline continues to build up. As at the end of 2nd

Quarter 2011, there was a total supply of 71,111 uncompleted private residential units from

projects in the pipeline6, higher than the 68,887 units in 1st Quarter 2011.

Of the supply in the pipeline, 33,899 units remained unsold as at 2Q2011. The unsold units

comprised 10,309 units in CCR, 7,610 units in RCR and 15,980 units in OCR.

A total of 4,802 uncompleted private residential units were launched for sale by developers in

2nd Quarter 2011, compared with 4,130 units in 1st Quarter 2011.

At the same time, 4,325 uncompleted private residential units were sold by developers,

compared with 3,430 units in 1st Quarter 2011. Developers also sold 119 completed private

residential units in 2nd Quarter 2011.

Sub-sales accounted for 7.4% of all sale transactions in 2nd Quarter 2011, lower than the

8.3% recorded in 1st Quarter 2011.

The stocks of private residential units increased by 2,054 units in 2nd Quarter 2011. At the

same time, the vacancy rate of completed private residential units increased from 4.9% as at

the end of 1st Quarter 2011 to 5.1% as at the end of 2nd Quarter 2011

Peng and Wheaton (1994) argued that as there is always excess demand for the

government subsidized public housing, there is a near zero vacancy rate in the public sector.

Given excess demand for public units, small changes in public housing prices have little or

no impact on the private housing market.

The major impact is from the demand side, that the quantity of public housing stock alters the

number of households who seek housing in the private sector. In their case, people that

dwell in the public sector are ruled out from seeking housing in the private sector.

Government policy can have a profound impact on the operation of the housing market.

Quigley and Raphael (2004a) found evidence that the degree of regulation governing land

use and residential construction dampens the supply side adjustment when the market

encounters a demand shock. They also found a positive relationship between the degree of

regulatory stringency and house prices (see also Malpezzi, 1996). Mayer and Somerville

(2000b) showed in their supply equation that land regulation lowers the level of new

construction and price elasticity of supply. Difficulty of measuring government policy is still a

problem in the housing literature, though various indicators have been proposed like the

cross-metropolitan regulatory indicators constructed by Malpezzi (1996) and the international

regulatory indicators by Angel (2000).

Public housing and unsubsidized housing stocks grow together in the long run. Murray

(1999)’s article suggested that in an attempt to analyze the housing supply in the private

sector, we need to take account of influence from the public sector and vice versa. This might

be especially relevant for housing markets in places like Singapore and Hong Kong which

contain a dominant public housing sector.

Local research has tried to build a structural model for the private residential property market.

In Lum (2002), instead of modelling the demand and supply separately, the author directly

estimated a reduced-form price equation as a function of income, mortgage rate, construction

cost and quantity of government land sales. One criticism of Lum’s model is that population

factor was missing in the long-run price equation. As Smith (1969) argued, in the short run,

population increases may be accommodated in a relatively fixed housing inventory by

varying intensity of occupancy. But in the long run, especially under conditions of rising real

incomes, population growth is a vital factor in determining the level of demand.

A number of studies tested whether there is a positive housing wealth effect on consumption

in Singapore, which has been found to be true in OECD countries (See Case et al., 2001,

Abeysinghe and Choy, 2004, 2007 among others). There exists ambiguous conclusion

among different studies. Phang (2004) found no significant housing wealth effect on

aggregate consumption in Singapore.

Abeysinghe and Choy (2004) analyzed the effect of house prices on the financial assets and

housing loans of Singapore households. They used a loan variable to capture the negative

effect on consumption of an increase in house price, which they termed as price effect.

Edelstein and Lum (2004) separated the wealth effect of the public housing and private

housing and, as with Phang (2004), found that there is no significant private housing wealth

effect. However, they noted that the rise in HDB resale prices does have a significant pumpup

effect on aggregate consumption.

Housing supply positively responds to the GDP growth rate, an indicator of the soundness of

the macro-economy. Negative coefficient for the change in the vacancy rate shows that

excess housing supply, signaled by a high vacancy rate, stops suppliers from building more

houses.

Studies have shown that the private sector is heavily influenced by the dominant public

sector. Phang and Wong (1997) and Phang (2001) provided evidence that the availability of

HDB housing loans and CPF housing withdrawals has the most significant impact on the

private housing price among all the housing policies from 1975 to 2004. Ong and Sing (2002)

studied the interaction between the public and the private sector, with a focus on the price

discovery mechanism. They tested two hypotheses which are upgrading hypothesis and

market-force hypothesis.

The upgrading hypothesis states that the public sector leads the private sector because

home-owners are able to upgrade from public housing to private housing as a result of the

capital gain of selling their subsidized HDB flats in the resale market. The market-force

hypothesis states that the private sector leads the public sector as the latter is regulated by

the government in contrast to the market driven private sector. Therefore, macroeconomic

shocks are likely to affect the private sector first. Their empirical results concluded that there

is a bi-directional causality between the private and the public housing market and the

leading force from the private sector to the public sector is stronger.

To conclude, several gaps can be seen from the existing housing models in the local

literature. More efforts are needed to build a general structural model for the Singapore

housing market, which can account for the population factor, the user cost of homeownership,

expectations, the vacancy rate and interaction of the public and the private

housing sectors.

Central Provident Fund (CPF) is a factor which influences the supply of housing. CPF is a tax

exempt compulsory savings fund. Under statute, the employees are required to save a

certain portion of their monthly income in a CPF account. At the mean while, the employers

also make monthly contribution to the employees’ CPF accounts. The current CPF

contribution rates for employees and employer are 20% and 16.5% respectively.

CPF savings is a huge sum of capital to finance development including public housing. The

capital budget of public housing which under Housing Development Board (HDB) has funded

by low interest loans from the government through CPF mechanism represents over a third

of the government’s development estimates in the state budget. HDB has been financed and

implemented within the limits of national resources without recourse to foreign funds

(Mohammed Razali Agus, John Doling and Dong-Sung Lee 2002).

There are three separate accounts for CPF savings which are the Ordinary Account,

Medisave Account and Special Account. Employees are entitled to withdrawn certain amount

of CPF saving under Ordinary Account when purchase of public housing. It means CPF

saving provides a source of mortgage financing to help home buyers meet their mortgage

payment in term of down payment and monthly instalments. CPF contribution rates and HDB

flat prices are match closely to the rates of wages. HDB offers housing loans to all HDB flat

buyers with an interest below market rate in order to purchase a flat without suffering a

reduction in monthly possible income. In view of this, housing demand in Singapore is greatly

affected by CPF saving.

Real house prices are directly determined by the willingness of households to pay for (and

willingness of builders to supply) a constant-quality house. Changes in the quantity of

housing demanded will affect real prices only to the extent that the long-run housing supply

schedule is positively sloped. The total derivatives which carry along with age all of the

average characteristics such as income, marital status and education associated with that

age-demand results. (Mankiw and Weil 1989)

To obtain estimates of the demand per household, we take the dot product of the age

distribution of the population and amount of housing demanded by each age group according

to our total and partial derivatives;

First, the impact of demand on price depends on the supply elasticity of houses. With an

infinite elasticity of supply, demand is (R. Green, P.H. Hendershott / Reg. Sci. a ) irrelevant;

price is determined solely by supply conditions.

Second, even with a significantly less than perfectly elastic supply, factors other than our

demand variable affect real prices. Numerous investigators have attributed a major role to

changes in real after-tax interest rates and technological changes in housing construction

could be important.

Third, if markets are efficient, only changes in market demographic demand forecasts should

effect real prices] Of course, the underlying premise of Mankiw and Weil (1989) is that

housing markets are not efficient and, in particular, that markets did not efficiently process

the known aging of the baby-boomers.

The age of potential buyers can also affect housing demand. In general, an area with an

ageing population will have less demand for new housing than one where new, younger

households are being formed. On the other hand, an area with a disproportionately young

population can place heavy demands on educational facilities - sometimes at the developer’s

expense.

Age also determines the type of housing that will be required. An area with large numbers of

elderly people, young singles, or young married people may be ripe for apartments or

condominiums. An area with families headed by people in the 30 to 55 age group is more apt

to prefer single-family housing.

2.4.3 Meeting Genuine Housing Needs

In March 2012, HDB launched 7,978 flats for sale under the Build-To-Order (BTO) to

substantial housing demand in Singapore. (HDB, Press Releases, 28 March 2012)

HDB has ramped up flat supply substantially to meet housing needs; estimate 50,000 units in

various parts of Singapore (26 towns and estates) will provide wider choice and meet the

diverse needs and aspirations of home buyers in next two years.

Bachelor of Applied Science in Construction Management Intake 28-Group "G"

Household income from work increased for all income groups, in tandem with strong

employment creation in 2011, (according to the Singapore Department of Statistics’ latest

report on "Key Household Characteristics and Household Income Trends, 2011").

Among resident employed households1, median monthly household income2 per household

member rose from $1,850 in 2010 to $1,990 in 2011, an increase of 7.9 per cent in nominal

terms, or 2.7 per cent in real3 terms. The first deciles saw the highest percentage growth in

average monthly household income per member of 11 per cent and 5.8 per cent in nominal

and real terms respectively.

On a total household income basis, median monthly household income from work increased

from $6,340 in 2010 to $7,040 in 2011, an 11 per cent growth in nominal terms, or 5.6 per

cent in real terms. The tenth deciles saw the highest percentage growth in average monthly

household income of 14 per cent in nominal terms, or 7.9 per cent in real terms.

Cumulatively between 2001 and 2011, the median monthly household income from work per

household member of resident employed households rose by 20 per cent in real terms, with

most of the gains coming from 2006 to 2011. On a total household income basis, the median

monthly household income from work rose by 22 per cent in real terms between 2001 and

2011.

The Department of Statistics has completed the development of annual income-based

estimates of GDP1 or GDP (I). The income approach estimates Gross Domestic Product

(GDP) as the sum of the incomes receivable by each institutional sector from the domestic

production of goods and services.

Overall residential demand in a local area is determined by the interaction of household

preferencs and expenditures (demand) with the quality and availability of existing inventories

(supply). Within overall demand patterns, the type of housing is a function of the household

characteristics (age, family size, incomes, lifestyle preferences, and so on), housing density

patterns (zoning, land values, transportation systems, and so on), and costs of production

(land, labor, materials, infrastructure, and so on). On a more practical basis, these patterns

are further influenced by mortgage costs and availability, developer capabilities, government

tax policies, environmental pressures, and myriad other factors that may vary from area to

area and period to period.

An interesting feature of condominium development and growth in Singapore is its close link

with the performance of the Republic's economy. As a global city with excellent international

links, the Singapore economy is particularly susceptible to external economic influences and

therefore highly volatile. These rapid changes in the economic fortunes of the Republic affect

the performance of the property market and this is clearly reflected in the condominium

market. From the inception of the condominium concept to the present, three phases of

development and growth linked to the performance of the property market and the economy

can be identified: the pre-boom and early condominium development; the boom and rapid

growth; and the slump and consolidation.

The demand and popularity of condominiums have risen in the early 1980s following a rapid

growth of Singapore’s economy. The growing affluence of Singaporeans, coupled with the

strong influx of multinational corporations and foreign talents, fueled the demand for Public

and Private Housing.

Public Housing in Singapore: Since 1960, the Housing and Development Board (HDB) in

Singapore plans and develops quality public housing and its related facilities. Today, some

85% of Singaporeans live in HDB flats. These ranges from 3-room flats at about 800 sq ft to

executive flats at about 1600 sq ft and these are located all over the island.

Public housing in Singapore can be categorised into the following types

(a) New flats

The primary acquisition avenue is through the purchase of new flats directly from the HDB.

Over the years, various forms of sale programmes has been in place, with the current mode

of sale known as the Build-To-Order (HDB) programme launched in 2001.

(b) Build-to-Order (BTO)

The Build-To-Order (BTO) is a responsive system offering flexibility in location and timing for

flat buyers. For Eligible buyers (planning to shift into a new HDB apartment in the near future)

can apply for apartments in their preferred location from the specific sites launched

(c) Design, Build & Sell Scheme (DBSS)

The Design, Build and Sell Scheme (DBSS) was introduced in 2005 to offer greater choice

and wider variety to meet the housing aspirations of higher income flat buyers for better

design and finishes. The involvement of the private sector in the design and construction of

public housing and enables public housing to be more responsive to the needs and

aspirations of Singaporeans. It has since been subsumed under HDB’s Premium Apartments,

which comprises both Design & Build and Design Plus flats.

(d) Executive Condominiums (EC)

Executive Condominiums (EC) were introduced to cater to Singaporeans, especially young

graduates and professionals who can afford more than an HDB flat but find private property

to be out of their reach. ECs are comparable in design and facilities to private condominiums

as they are developed and sold by the private developers. ECs are developed and sold by

private developers.

(e) Resale flats

Existing flat owners are allowed to sell their flats on the open market to any eligible buyer at

a mutually agreed price. While the HDB does not regulate these prices, the buyer and seller

must declare the true resale price to the HDB. In addition, most flat owners may only sell

their flat if they have met the Minimum Occupation Period (MOP) requirement, which was

introduced to help reduce speculative activities.

(a) Apartment

Apartments are low or high-rise private residential buildings which typically have little or no

common facilities

(b) Condominium

Condominiums are mainly mid to high-rise buildings that are more luxurious with their full

facilities (covered parking, 24-hr security, clubhouse facilities; e.g. swimming pools,

tennis/squash court, gym, etc.).

(c) Townhouses

Townhouses are a blend of landed terrace houses with the recreational facilities of

condominiums. Townhouses can form entire estates, or can be part of a larger condominium

establishment.

(d) Landed Properties

The variety of landed properties such as bungalows, semi-detached houses, or terrace

houses which are the luxury of being an independent building on a plot of land.

"To choose a house means to choose a lifestyle", (Fleischer, 2007). A home is a final

destination of all after a long day of a myriad of activities. To be precise, when one chooses a

house, the safety and security, price and market value, quality, location, proximity to

amenities, style and conveniency of travelling, for instance, commuting to work, are among

top priorities for house purchases decision making. Consumer preferences affect the supply

and demand of housing in Singapore.

A better environmental state of attractive features of clean and green, more space and

serenity spells the needs of consumers. Government intervention plays an important part in

the allocation of housing supply. Current majority of flats and condominiums somehow

demarket the various social status of individuals. Consequently, to encourage socialinteraction,

new mix of housings today comprise of 1-room to 5-room Public Housing and

various types of Private Housing, to meet the needs of consumers. The space one lives

influence social relationships (Fleischer, 2007). Advance technology brings forth sky patios,

integrated residential suites including SOHO (Small Offices and Home Offices) apartments,

retail lifestyle mall and with MRT (Mass Rapid Transport), LRT (Light Rapid Transport) and

air-conditioned bus interchange in the vicinity.

2.4.9 Impact of Influx of Foreigners

To keep its competitive advantage (Sim et al, 2003) in the global market, Singapore must

relentlessly upgrade its workforce in skills through education and in work attitude including

life quality. The aging population and low birth rates now is overwhelming. In the 1990s,

inflow of foreigners, at the initiative efforts of Government, makes Singapore their home. To

maintain competitiveness in the global economy and attract investments, Singapore

encourages elites of talents and skills to live and grow here. Throughout now, the influx of

foreigners also raise the demand for housing that is yet met by supply as there is a lag

between supply and demand. The foreigners’ population is premature before concrete

housing supply could cater to their needs. Consequently, when supply is there, the aforesaid

foreigners might have already migrate to another place as granting of permanent residency

and citizenship has its criterion to meet. The gap to be bridged between supply and demand

will require meticulous planning on the Government’s part.

Ageing population is one of the main factors which influence the demand of housing in

Singapore. Based on the survey data from Singapore Department of Statistics (DOS) in

2005, it is expected to have an increase of 13.5% of the total number of resident population

in Singapore that aged 65 and above in year; and the expected number of elderly will be

increase to 873,300 in year 2030. By then, there will be one elderly out of every five

residents (Committee on Ageing Issues 2006).

The government recognised this ageing population matter seriously and resolving the

shortcoming problems progressively in order to provide a better living for the elderly. In lieu of

this, the demand of housing has increase indirectly. The government has implementing

various measures to make homes more elder-friendly and there is a comprehensive range of

housing schemes to meet the needs of the elderly.

The government promotes the housing policies and programmes for current and future

elderly by the following approaches:-

a) Approach 1: Housing Policies and Schemes to facilitate mutual care and support by

families

b) Approach 2: Monetisation Options to enable elderly to unlock home equity for

retirement income.

Refer to Approach 1; the government has increase the monthly income ceiling level for

extended families in order to give a flexibility to purchase new HDB flat. The extended

families also allow to latter buying resale flats with the CPF Housing Grant. Besides that,

married children are encouraging to stay with / near parents under the Married Child Priority

Scheme and Higher CPF Housing Grant. For those who are single, the government has

promoting the "Higher-tier Single" for the purpose of encourage single to live with parents

(Yap Chin Beng 2009). These encouragement and promotions are helping the current and

future elderly especially in the demand of public housing.

Refer to Approach 2, the government encourages the elderly who have alternative place to

stay with to sell or sublet their whole flat. By selling their flat, a full housing equity is available

for their retirement needs. Elderly enjoys regular income and retain potential with further

capital appreciation of flat by sublet their flat under HDB’s approved Subletting Scheme. The

government has been promoting the Lease Buyback Scheme and provide subsidy to help

the elderly who are aged 62 and above to stay in smaller flat to monetise their flat value (Yap

Chin Beng 2009). From this scheme, elderly can receives monthly income and at the same

time they can continue to live in same flat, community and environment.

Recently, quite a number of elderly has downsized of their bigger HDB flat to smaller flat.

Government has constructed quite a number of smaller flats in 3-room and 2-room in this few

years in order to meet the demand of elderly need. For those elderly who has downsized

their flat are entitled to $20,000.00 bonus from the government (Conrad Tan 2012).

Currently, the government has introducing the Studio Apartment (SA) which is purpose-built

small apartment complete with attractive designs, friendly fixtures and fittings for elderly who

are at least 55 years old with the financial means to live an independent lifestyle and facilitate

enhance ease of mobility and quality of life. The above-mentioned schemes have good result

in resolving ageing population problems in the society currently but it is still insufficient for

future. Due to the rapidly increasing number of elderly, the current provision might not be

sufficient to cater the needs of future seniors who are better-educated and have higher

standard of lifestyle and housing.

Education level is another of the factors which influences the demand of housing. Due to

increase of education level of Singapore residents, the expected living lifestyle is increase

compared with previous generation. Because of this, the demand of housing must meet the

basic housing need which providing better standards with some amenities.

HDB has developed a range of flat design such as 1, 2, 3, 4 and 5 room flats, and executive condominium in order to improve the living conditions and to follow the current market trend

required by the new generation population who are with higher education level.

Living standard and basis requirement in term of design, layout, quality of works and the

amenities of the surrounding housing estates are highly focus by the people who with higher

education level. Therefore, the quality of public and private housing is measured by the

CONQUAS (Construction Quality Assessment System) score. However, the measurement of

CONQUAS score does not do justice to accuracy and significance; maybe, consideration for

defects should be increased in numbers instead of allocating the same zero marks for 1

number of defects to multiples of defects. For example, 100 marks for 100 numbers of

defects signify defects need to be rectified and far from satisfactory to achieve quality;

whereas, 100 numbers of defects given zero marks that is equivalent to a zero given 1

number of defects signify little to attainment of quality.

HDB is in the process to review and understand fully the expectations and aspirations of the

residents. Upgrading and redevelopment for the old housing estates are in the progress of

construction rapidly. The purpose of upgrading and redevelopment is mainly to improve the

standard of design and layout of the older flats closer to newer ones. Besides that, the value

of the older flats is increasing indirectly.

Those highly educated people interested to purchase those old housing estates only will

happen when the upgrading and redevelopment works are completed. Upgrading and

redevelopment is important to build a society in each housing estate with different mixture in

group of population in term of education, income level and age group of people. The demand

of housing is also increased indirectly.

In order to balance population and housing, top priority is to strategize on factors that affect

supply and demand for housing.

In order to cater sufficient housing for elderly and solve the ageing problem in Singapore

therefore, Government may consider taking up ideas from other countries such as Hong

Kong and Japan which has currently implemented some forms of private retirement

housings. Based on the Urban Redevelopment Authority (URA) survey carried out in 2002

has shown that the idea of living in retirement housing/ villages was acceptable by the

society. More than 20% of elderly households are acceptable to the aforesaid concept

(Committee on Ageing Issues 2006).

According to Mah Bow Tan (2010), there are essentially three ways to allocate a scarce

resource like housing: by price (that is, highest bidder gets it), by queue (that is, first-come,

first-served), or by ballot (that is, draw lots). Allocating by price is basically the way resale

flats are bought and sold in the free market. For new flats, HDB has adopted either a queue

system or ballot system.

In 2002, HDB switched to the BTO system to respond better to demand that was becoming

more sentiment-driven. Under this system, buyers ballot for the chance to select a flat.

Certain groups, such as first-timers and those applying to live near their parents, are given

extra tickets in the ballot to increase their chances of getting a flat. 95% of the flat supply is

set aside for first-timers. Buyers have to pay a down payment to secure a booking. Each

booking represents a committed buyer. HDB proceeds to build when the majority of flats are

booked. Flats are ready for occupation within three years of booking.

With better matching of supply and demand, the BTO system prevents a major supply

overhang. It also allows HDB to retain a small rolling buffer of a few thousand balance flats,

which minimises holding costs to taxpayers. When demand is high, as it is now, the number

of BTO projects is stepped up. However, there are pros and cons of BTO & RFS despite

these systems is better alternative to balance supply and demand. (Refer to Appendix "A")

As supply shortage of housing is not only due to HDB hesitate to build new flat but also due

to migration policy which allows to increase Permanent Resident population and cause

increasing demand for housing, government has restricted on the approval of PR status so

as to mitigate the increasing demand while building more public housing and allowing the

lands for private housing.

Singapore is now actively promoting economic policies which can lower its production costs.

The rapid rise is not in the government’s interest. Foreign investors in Singapore’s housing

markets share a clear cultural similarity. They are mainly Chinese in neighbouring countries.

The political stability attracts them to seek safe heaven in Singapore. But the anti-speculation

policies defer them to be active in the housing markets.

The CPF funding has a positive correlation with the housing prices in Singapore. The

mortgage rate has relatively stable in Singapore. Therefore we can safely say that mortgage

rate may not affect the housing prices very much in Singapore.

The change of housing prices may reflect the impact of the external economic conditions

such as the oil crisis and financial crisis. It indicates the vulnerability of small economies. The

relationship between housing prices and domestic economic development is less conclusive.

However, we find that the external economic conditions have much impact on housing

markets. Singapore is more vulnerable to the impacts of the external economic development.

The influx of foreign population in Singapore does not reflect a positive impact on the

housing prices. Now the immigrant growth rate is double that of natural growth rate in

Singapore. This can be explained that external population in Singapore do not have strong

incentives of buying (United Nations Human Settlements Programme 2011).

The format of the literature review is structured according to Introduction; Housing Supply in

Singapore, Demand of Housing and Summary, as the research project basically examines

the issues from a qualitative perspective, the focus of this literature review is on qualitative

studies rather than quantitative works.

The main issues and research area of housing supply and demand in Singapore 2020 have

been discussed in the previous chapters. The factors which cause the unbalanced housing

supply and demand also have been described in details. This chapter will describe the

methodology of the research by discussing the research techniques, formulation of the data

collection instrument and how the primary data will be analysed. As described in the previous

chapter, this research will be carried out by mixed methods research, employing the

combination of quantitative and qualitative approaches.

Less well known than both the quantitative and qualitative strategies are those that involve

collecting and analyzing both forms of data n a single study. The concept of mixing different

methods probably originated in 1959, when Campbell and Fiske used multiple methods to

study validity of psychological traits. They encouraged other to employ their "multi method

matrix" to examine multiple approaches to data collection in a study. This prompted others to

mix methods, and soon approaches associated with field methods such as observations and

interviews (qualitative data) were combined with traditional surveys (quantitative data) (S.D.

Sieber, 1973).

Recognizing that all methods have limitations, researchers felt that biases inherent in any

single method could neutralize or cancel the biases of other methods. Triangulating data

sources-a means for seeking convergence a cross qualitative and quantitative methods -

were born. From the original concept of triangulation emerged additional

reasons for mixing different types of data. For example, the results from one method can help

develop or inform the other method (Green, Caracelli, and Graham, 1989). Alternatively, one

method can be nested within another method to provide insight into different levels or units of

analysis.

A mixed methods approach is one in which the researcher tends to base knowledge claims

on pragmatic grounds (e.g., consequence-oriented, problem-centered, and pluralistic). It

employs strategies of inquiry that involve collecting data either simultaneously or sequentially

to best understand research problem. The data collection also involves gathering both

numeric information (e.g., on instruments) as well as text information (e.g., on interviews) so

that the final database represents both quantitative and qualitative information. The

researcher bases the inquiry on the assumption that collecting diverse types of data best

provides on understanding of a research problem. The study begins with a broad survey in

order to generalize results to a population and then focuses, in a second phase, on detailed

qualitative, open-ended interviews to collect detailed views from participants.

The research method used is the "Mixed-Method Research" to tackle complex issues that

reside at multiple levels. It can enhance the type of information gathered and can serve to

increase the validity of both qualitative and quantitative research. (Anthi Katsirikou & Christos

H. Skiadas, 2010)

The research process is to produce new knowledge or deepen understanding of a topic or

issue. This process takes three main forms

Exploratory research, which helps identify and define a problem or question.

Constructive research, which tests theories and proposes solutions to a problem or

question.

Empirical research, which tests the feasibility of a solution using empirical evidence.

For qualitative research is often used as a method of exploratory research as a basis for later

quantitative research hypotheses.

For quantitative research which is systematic empirical investigation of quantitative properties

and phenomena and their relationships. A research strategy is a procedure for achieving a

particular intermediary research objective such as sampling, data collection, or data analysis.

The advantages of Mixed Method are its strengths and weaknesses that are able to be

assessed and show different perspectives on the topic.

Good research depends on good data. Research is "Systematic investigation aimed at

increasing the sum of human knowledge and understanding." (Cited: Aguillermo Aranda-

Mena, 2011: OED). It is important to define the problem and set research objectives for the

research plan to guide the entire research process (Kotler, Armstrong, 2011).

1 Define the problem

2 Set research objectives

3 Identify the specific causes for information needed to obtain the preliminary information

required

4 Implementation of research plan

5 Analysis of data method

This research plan is large and complex, needs following input of specific information: the

demographic, economic, and lifestyle (ibid). In order to uncover the problems addressed, the

research objectives, evaluate the quality of the information to be obtained for implementation and data analysis method are updated, accurate, relevant and

unbiased.

The selected survey research method is its flexibility and sensitivity to match the needs of the

research question. The designed questions aim to achieve specific data collection through

inquiry about relevant expertise, opinions, expectation, anticipation and trust from a broad

population base of appropriate professionals to prospective home buyers.

The disadvantages are the selected interviewers may need more time to reflect to arrive at

desired information inquired; thus, without putting in much effort and time, the answers may

not be valid. Others may feel their expertise is being challenged if they gave the wrong

information or they may not be willing to share their knowledge and felt an intrusion of privacy.

This questionnaire aims at a discreet selection of participants to achieve the desired outcome

of this research plan.

Due to the nature of this research plan, being time constraint, this sample questionnaire

survey is targeted to be completed by equal numbers of 50 Architects, Engineers,

Developers, HDB Officers, Housing Agents and Others, for example , the public/ common

people. The range of expected pools of equal mix of respondents/ participants is to ensure

an expected outcome as per the questions designed.

The closed-ended questions in this research plan are designed to aid in primary data

collection. The goal of this questionnaire is to discover the experts’ opinions; participants’

demand and response and future plan; forecasted future population and trust for the supply

and demand of housing by 2020 as following page :

Data analysis involved in analysing the data collected from the respondents. The first step is

the data preparations which involves data checking and key-in the data into the system. The

data preparation must be proper plan on how the data to be logged, entered, transformed if

necessary and organised it into a database. It is essential in order to facilitate accuracy and

efficient statistical analysis.

The next step is data analysis which consists of two parts which are descriptive statistics and

inferential statistics. Descriptive analysis is a process to describe the data and examine

relationship between variables. It is a simple analysis which summaries the basis information

for the data collected such as mean, standard deviations and range of scores for the

independent and dependent variables in the study.

Inferential statistics is a process to examine causal relationship. It helps to describe the

conclusion beyond the immediate samples and data. Inferential statistics is not useful in

describing the general conclusion on the basis identified finding but it also helps to precise

the probability of error to be met as well.

The last step is interpreting of the results which presents the results in the tabulation and

interprets it from the statistical test. It means to draw a conclusion from the results analysed.

The research design on techniques, justifying methods, primary data collection instrument

design, data analysis method is approached by employing the combinations of quantitative

and qualitative methods.

With the limitations to all methods, the collection of data under this mixed methods have the

advantages to assess and provide various perspectives on the research topic/ problem being

well addressed.

Good research depends on good data. Thus, detailed analysis of findings could be arrived at

for reporting. However, this proposed research plan can yet be proven worthwhile to proceed

unless the design is being put to a test.

As population growth continues and increases the demand for housing in the city of

Singapore, there is a need to find the way to balance the supply and demand by government

in order to provide affordable public housing to approximately 85% of the population. This

research is focused on the basic issues which influence the supply and demand of housing.