The behaviors of flippers, rental investors and owner-occupiers in Singapore private housing market

Abstract

The present paper reveals the sources of housing market fluctuations by examining the interactions of three types of housing market participants: owner-occupiers, rental investors and flippers. We study their behaviors as a home buyer and as a home seller. It is found that flippers are the “smartest” group while rental investors outperform owner-occupiers in terms of fetching buying discounts and selling premiums. It is also found that, although flippers are able to adopt “good” trading pattern, their trading could trigger positive feedbacks of owner-occupiers and as a result lead to market over-pricing.The interactions between owner-occupiers (who dominate the housing market by the number of participants) and flippers explain why and how flippers, as the smallest group by the number of participants, could drive the fluctuations of the whole housing market. We reiterate that studying the impacts of individual trading patterns on a housing market but ignoring the interactions among the participants may generate conflicting or misleading results.The findings imply that transaction taxes, such as the stamp duties targeted at short term sellers, should always be implemented to control flippers’ activities in order to stabilize housing market.