The Effects of Housing Price Changes on the Distribution of Housing Wealth in Singapore.pdfVIP

The Effects of Housing Price Changes on the Distribution of Housing Wealth in Singapore Joy Chan Yuen Yee Liu Yunhua Nanyang Business School, Nanyang Technological University, Nanyang Avenue, Singapore 639798 Fax: +(65) 792.4217, Tel: +(65) 799. 4949, Email: ayuliu@ntuvax.ntu.ac.sg Abstract Accelerating public housing prices may have resulted in housing wealth distribution changing over time. Measurement of public housing wealth distribution in Singapore from 1984 to 1992 is carried out. Result show that, overall, the distribution was reasonably good from 1984 to 1990. But, starting from 1991, inequality increased. Housing price change is the major reason for the change in equality. The estimated result of the impact of the price change on inequality indicates that a $1000 price increase in a 3-room flat reduces the Gini coefficient by 0.35 percent, while a $1000 price increase in a 5-room flat increases the Gini coefficient by 0.37 percent. The price change of a 4-room flat has an uncertain effect on inequality. 1. INTRODUCTION The resale price of public housing in Singapore has more than doubled in five years from 1990 to 1995.1 The accelerating public housing prices (due to the growing population and limited land space) could have resulted in the housing wealth distribution in Singapore changing since about 80 percent of Singaporeans own public housing (Table 1). Social problems like inequality might have been the consequence. It is therefore of interest to investigate how and by what percentage the housing wealth distribution changes over time when average housing price