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Urban Housing Affordability: Assessing the Effectiveness of Policy Interventions in the Singapore Public Housing Sector

Author

Listed:
  • Sau Kim Lum

    (National University of Singapore)

  • Xuefeng Zhou

    (Institute of Real Estate & Urban Studies)

Abstract

Housing affordability for many Singaporean households has been declining since the 1990s. While eligible households are directly allocated new-built public housing at subsidized rates, these rates reflect price behavior in the laissez faire resale market and would be higher during periods of excess demand. We examine two policy initiatives since 2011 to improve housing affordability for targeted population segments. First, the government has stabilized the prices at which it sells new- built units by increasing supply-side producer discounts to moderate the extent to which new unit prices track the resale market. Second, demand subsidies are provided to low- and middle-income households to buy new subsidized housing. Price stabilization has prevented the transmission of demand shocks from the resale market to the new-built public housing sector but not improved affordability. However, successive calibrations of capital grants boosted the price to income ratio and debt servicing ratio indicators for households with incomes below the national median. These improvements are progressive, with the less well-off benefitting the most. Furthermore, the grants do not appear to induce housing overconsumption the way that demand subsidies are prone to do so and provide some assurance that the policies adopted in Singapore have not generated allocative inefficiencies.

Suggested Citation

  • Sau Kim Lum & Xuefeng Zhou, 2019. "Urban Housing Affordability: Assessing the Effectiveness of Policy Interventions in the Singapore Public Housing Sector," International Real Estate Review, Global Social Science Institute, vol. 22(4), pages 597-625.
    • Handle: RePEc:ire:issued:v:22:n:04:2019:p:597-625
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    References listed on IDEAS

    as
    1. Gabriela Inchauste & Jonathan Karver & Yeon Soo Kim & Mohamed Abdel Jelil, 2018. "Living and Leaving," World Bank Publications - Reports 30898, The World Bank Group.
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    Cited by:

    1. Angel Alcantara & Stephanie M. Brewer & James J. Jozefowicz, 2023. "Rural-Urban Differences in Poverty: An Analysis of Pennsylvania Counties," International Journal of Economics and Financial Issues, Econjournals, vol. 13(5), pages 1-9, September.
    2. Edward S. W. Ti, 2023. "Property Values as a Function of Law and Policy," International Real Estate Review, Global Social Science Institute, vol. 26(1), pages 127-142.

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    More about this item

    Keywords

    Housing Affordability; Singapore Public Housing; Pricing Strategy; Demand Subsidies;
    All these keywords.

    JEL classification:

    • L85 - Industrial Organization - - Industry Studies: Services - - - Real Estate Services

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