The Dynamics of the Singapore Private Housing Market

Abstract

In this paper, a dynamic stock flow model is modified and applied to the Singapore private housing market. Two empirical models are then constructed, which offer an explanation for the dynamic patterns of both real private housing prices and new housing construction. In the long run, movements in the real GDP per capita and the total housing stock are found to have significant impacts on real housing prices, while the user cost, the public resale housing prices and the autocorrelation of housing prices with one lag explain most of the short-run dynamics of real housing prices. On the supply side, the long-run price elasticity of new housing construction is 1.31. It is also found that long-run new housing construction drops 6.5 per cent for every 1 per cent increase in the total housing stock.