Concurrent Ownership Restrictions in Singapore's Housing Markets

Abstract

Demand restrictions are used by government as a policy measure to curb price increases in overheating markets. Singapore’s government implemented demand restriction policies in 2011 and 2013 together with other cooling measures to disallow private housing owners from buying a public housing flat, while concurrently owning a private house. However, the policies do not prohibit public housing owners from upgrading to private houses, if they meet the occupation criteria set on their existing public housing flats. This paper sets up a policy experiment to test the asymmetric responses of these two groups of buyers in relation to the policy shocks by examining price variations in their housing purchases in the private housing markets. We use the sample of private housing transaction data between 2005 and 2015, and find significant and positive price effects, which are estimated at about 2.4% and 1.8% in 2010 and 2013, respectively, on private houses bought by public housing buyers relative to private housing buyers in the post-policy periods. The results affirm the asymmetric effects of the demand restriction policies on the two groups of buyers, and the price differences in their purchases are reflective of price elasticity of the policies on private housing buyers. For public housing buyers, the price premiums they pay for private housing are consistent with the upward mobility motives.