IDEAS home Printed from https://ideas.repec.org/a/sae/urbstu/v49y2012i7p1435-1451.html
   My bibliography  Save this article

New Supply and Price Dynamics in the Singapore Housing Market

Author

Listed:
  • Joseph T. L. Ooi
  • Thao T. T. Le

Abstract

In this paper, VAR models are employed to trace the price response of existing houses to the quantity of new units launched by homebuilders in Singapore between 1996 and 2009. Contrary to the ‘competition’ hypothesis prediction of a negative reaction, it is found that marginal supply Granger-cause existing house prices in a positive manner. The effect is robust to the inclusion of exogenous demand factors as well as price interaction in the primary (new houses) and secondary (existing houses) market segments. The ‘contagion’ effect is consistent with the hypothesis that developers, due to their ability to predict the market, are price leaders in the housing market. It is also found that homebuilders exhibit ‘herding’ behaviour in mimicking each other’s timing on when to market their new residential projects.

Suggested Citation

  • Joseph T. L. Ooi & Thao T. T. Le, 2012. "New Supply and Price Dynamics in the Singapore Housing Market," Urban Studies, Urban Studies Journal Limited, vol. 49(7), pages 1435-1451, May.
    • Handle: RePEc:sae:urbstu:v:49:y:2012:i:7:p:1435-1451
    DOI: 10.1177/0042098011415718
    as

    Download full text from publisher

    File URL: https://journals.sagepub.com/doi/10.1177/0042098011415718
    Download Restriction: no
    File URL: https://libkey.io/10.1177/0042098011415718?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Eric J. Levin & Robert E. Wright, 1997. "Speculation in the Housing Market?," Urban Studies, Urban Studies Journal Limited, vol. 34(9), pages 1419-1437, August.
    2. Christopher J. Mayer & C. Tsuriel Somerville, 1996. "Regional housing supply and credit constraints," New England Economic Review, Federal Reserve Bank of Boston, issue Nov, pages 39-51.
    3. Bover, Olympia & Muellbauer, John & Murphy, Anthony, 1989. "Housing, Wages and UK Labour Markets," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 51(2), pages 97-136, March.
    4. Reichert, Alan K, 1990. "The Impact of Interest Rates, Income, and Employment upon Regional Housing Prices," The Journal of Real Estate Finance and Economics, Springer, vol. 3(4), pages 373-391, December.
    5. Henry Munneke & Joseph T.L. Ooi & C.F. Sirmans & Geoffrey K. Turnbull, 2011. "Sequential Sales Of Similar Assets: The Law Of One Price And Real Estate," Journal of Regional Science, Wiley Blackwell, vol. 51(2), pages 355-370, May.
    6. Case, Karl E & Shiller, Robert J, 1989. "The Efficiency of the Market for Single-Family Homes," American Economic Review, American Economic Association, vol. 79(1), pages 125-137, March.
    7. Joseph T.L. Ooi & C.F. Sirmans & Geoffrey K. Turnbull, 2006. "Price Formation Under Small Numbers Competition: Evidence from Land Auctions in Singapore," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 34(1), pages 51-76, March.
    8. Fergus, James T, 1999. "Where, When, and by How Much Does Abnormal Weather Affect Housing Construction?," The Journal of Real Estate Finance and Economics, Springer, vol. 18(1), pages 63-87, January.
    9. Karl E. Case & Robert J. Shiller, 1987. "Prices of single-family homes since 1970: new indexes for four cities," New England Economic Review, Federal Reserve Bank of Boston, issue Sep, pages 45-56.
    10. Rosenthal, Stuart S, 1999. "Housing Supply: The Other Half of the Market a Note from the Editor," The Journal of Real Estate Finance and Economics, Springer, vol. 18(1), pages 5-7, January.
    11. Robert A. Simons & Roberto G. Quercia & Ivan Maric, 1998. "The Value Impact of New Residential Construction and Neighborhood Disinvestment on Residential Sales Price," Journal of Real Estate Research, American Real Estate Society, vol. 15(2), pages 147-162.
    12. Min Hwang & John M. Quigley, 2006. "Economic Fundamentals In Local Housing Markets: Evidence From U.S. Metropolitan Regions," Journal of Regional Science, Wiley Blackwell, vol. 46(3), pages 425-453, August.
    13. S. Wong & C. Yiu & M. Tse & K. Chau, 2006. "Do the Forward Sales of Real Estate Stabilize Spot Prices?," The Journal of Real Estate Finance and Economics, Springer, vol. 32(3), pages 289-304, May.
    14. Glaeser, Edward L. & Gyourko, Joseph & Saiz, Albert, 2008. "Housing supply and housing bubbles," Journal of Urban Economics, Elsevier, vol. 64(2), pages 198-217, September.
    15. Chan, Thomas Sai-fan, 1999. "Residential Construction and Credit Market Imperfection," The Journal of Real Estate Finance and Economics, Springer, vol. 18(1), pages 125-139, January.
    16. Meen, Geoffrey, 2002. "The Time-Series Behavior of House Prices: A Transatlantic Divide?," Journal of Housing Economics, Elsevier, vol. 11(1), pages 1-23, March.
    17. Seow-Eng Ong & Tien-Foo Sing, 2002. "Price Discovery between Private and Public Housing Markets," Urban Studies, Urban Studies Journal Limited, vol. 39(1), pages 57-67, January.
    18. Joseph T.L. Ooi & C.F. Sirmans & Geoffrey K. Turnbull, 2011. "Government Supply of Land in a Dual Market," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 39(1), pages 167-184, March.
    19. Rose Neng Lai & Ko Wang, 1999. "Land-Supply Restrictions, Developer Strategies and Housing Policies: The Case in Hong Kong," International Real Estate Review, Global Social Science Institute, vol. 2(1), pages 143-159.
    20. James M. Poterba, 1984. "Tax Subsidies to Owner-Occupied Housing: An Asset-Market Approach," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 99(4), pages 729-752.
    21. Ching-Chun Hua & Chin-Oh Chang & Chengho Hsieh, 2001. "The Price-Volume Relationships between the Existing and the Pre-Sales Housing Markets in Taiwan," International Real Estate Review, Global Social Science Institute, vol. 4(1), pages 80-94.
    22. DiPasquale, Denise, 1999. "Why Don't We Know More about Housing Supply?," The Journal of Real Estate Finance and Economics, Springer, vol. 18(1), pages 9-23, January.
    23. Blackley, Dixie M, 1999. "The Long-Run Elasticity of New Housing Supply in the United States: Empirical Evidence for 1950 to 1994," The Journal of Real Estate Finance and Economics, Springer, vol. 18(1), pages 25-42, January.
    24. Mankiw, N. Gregory & Weil, David N., 1989. "The baby boom, the baby bust, and the housing market," Regional Science and Urban Economics, Elsevier, vol. 19(2), pages 235-258, May.
    25. Mayer, Christopher J. & Somerville, C. Tsuriel, 2000. "Residential Construction: Using the Urban Growth Model to Estimate Housing Supply," Journal of Urban Economics, Elsevier, vol. 48(1), pages 85-109, July.
    26. Unknown, 2005. "Forward," 2005 Conference: Slovenia in the EU - Challenges for Agriculture, Food Science and Rural Affairs, November 10-11, 2005, Moravske Toplice, Slovenia 183804, Slovenian Association of Agricultural Economists (DAES).
    27. Malpezzi, Stephen, 1999. "A Simple Error Correction Model of House Prices," Journal of Housing Economics, Elsevier, vol. 8(1), pages 27-62, March.
    28. Somerville, C Tsuriel, 1999. "Residential Construction Costs and the Supply of New Housing: Endogeneity and Bias in Construction Cost Indexes," The Journal of Real Estate Finance and Economics, Springer, vol. 18(1), pages 43-62, January.
    29. Stover, Mark Edward, 1986. "The price elasticity of the supply of single-family detached urban housing," Journal of Urban Economics, Elsevier, vol. 20(3), pages 331-340, November.
    30. James R. Follain, Jr., 1979. "The Price Elasticity of the Long-Run Supply of New Housing Construction," Land Economics, University of Wisconsin Press, vol. 54(2), pages 190-199.
    31. Harter-Dreiman, Michelle, 2004. "Drawing inferences about housing supply elasticity from house price responses to income shocks," Journal of Urban Economics, Elsevier, vol. 55(2), pages 316-337, March.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Sanghyun Kim & Juhyung Kim & Jaejun Kim, 2016. "Structural Changes in the Korean Housing Market before and after Macroeconomic Fluctuations," Sustainability, MDPI, vol. 8(5), pages 1-20, April.
    2. Huifu Nong, 2024. "Integration and risk transmission across supply, demand, and prices in China’s housing market," Economic Change and Restructuring, Springer, vol. 57(3), pages 1-28, June.
    3. Ooi, Joseph T.L. & Le, Thao T.T., 2013. "The spillover effects of infill developments on local housing prices," Regional Science and Urban Economics, Elsevier, vol. 43(6), pages 850-861.
    4. Li, L. & Bao, Helen X.H. & Robinson, Guy M., 2020. "The return of state control and its impact on land market efficiency in urban China," Land Use Policy, Elsevier, vol. 99(C).
    5. Ooi, Joseph T.L. & Le, Thao T.T. & Lee, Nai-Jia, 2014. "The impact of construction quality on house prices," Journal of Housing Economics, Elsevier, vol. 26(C), pages 126-138.
    6. Faith Wambui Kanjumba, 2017. "Economic and Innovative Factors Influence on Funding of the Supply-Side of Housing in Nairobi, Kenya," Business and Management Studies, Redfame publishing, vol. 3(4), pages 39-53, December.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Ball, Michael & Meen, Geoffrey & Nygaard, Christian, 2010. "Housing supply price elasticities revisited: Evidence from international, national, local and company data," Journal of Housing Economics, Elsevier, vol. 19(4), pages 255-268, December.
    2. Lozano Navarro, Francisco-Javier, 2015. "Elasticidad precio de la oferta inmobiliaria en el Gran Santiago [Housing supply elasticity in Greater Santiago]," MPRA Paper 65012, University Library of Munich, Germany.
    3. Mayer, Christopher J. & Somerville, C. Tsuriel, 2000. "Residential Construction: Using the Urban Growth Model to Estimate Housing Supply," Journal of Urban Economics, Elsevier, vol. 48(1), pages 85-109, July.
    4. Anthony Owusu-Ansah, 2012. "Modelling the supply of new residential construction for local housing markets and estimation of housing supply price elasticities: The case of Aberdeen, UK," ERES eres2012_097, European Real Estate Society (ERES).
    5. Malpezzi, Stephen & Maclennan, Duncan, 2001. "The Long-Run Price Elasticity of Supply of New Residential Construction in the United States and the United Kingdom," Journal of Housing Economics, Elsevier, vol. 10(3), pages 278-306, September.
    6. Oliver W. Lerbs, 2014. "House prices, housing development costs, and the supply of new single-family housing in German counties and cities," Journal of Property Research, Taylor & Francis Journals, vol. 31(3), pages 183-210, September.
    7. Oikarinen, Elias & Peltola, Risto & Valtonen, Eero, 2015. "Regional variation in the elasticity of supply of housing, and its determinants: The case of a small sparsely populated country," Regional Science and Urban Economics, Elsevier, vol. 50(C), pages 18-30.
    8. Harter-Dreiman, Michelle, 2004. "Drawing inferences about housing supply elasticity from house price responses to income shocks," Journal of Urban Economics, Elsevier, vol. 55(2), pages 316-337, March.
    9. Arthur Grimes & Andrew Aitken, 2010. "Housing Supply, Land Costs and Price Adjustment," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 38(2), pages 325-353, June.
    10. Wouter Vermeulen & Jan Rouwendal, 2007. "Housing Supply and Land Use Regulation in the Netherlands," Tinbergen Institute Discussion Papers 07-058/3, Tinbergen Institute.
    11. Wouter Vermeulen & Jan Rouwendal, 2007. "Housing supply in the Netherlands," CPB Discussion Paper 87, CPB Netherlands Bureau for Economic Policy Analysis.
    12. Su Han Chan & Ko Wang & Jing Yang, 2011. "A Rational Explanation for Boom-and-Bust Price Patterns in Real Estate Markets," International Real Estate Review, Global Social Science Institute, vol. 14(3), pages 257-282.
    13. Wouter Vermeulen & Jan Rouwendal, 2007. "Housing supply in the Netherlands," CPB Discussion Paper 87.rdf, CPB Netherlands Bureau for Economic Policy Analysis.
    14. Pedro Miguel Moreira Lopes Garcês & Cesaltina Maria Pacheco Pires, 2011. "New housing supply: what do we know and how can we learn more?," CEFAGE-UE Working Papers 2011_18, University of Evora, CEFAGE-UE (Portugal).
    15. Oliver Lerbs, "undated". "House Prices, Housing Development Costs, and the Supply of New Single-Family Housing in German Counties and Cities," Working Papers 201283, Institute of Spatial and Housing Economics, Munster Universitary.
    16. Caldera, Aida & Johansson, Åsa, 2013. "The price responsiveness of housing supply in OECD countries," Journal of Housing Economics, Elsevier, vol. 22(3), pages 231-249.
    17. Lerbs, Oliver W., 2012. "House prices, housing development costs, and the supply of new single-family housing in German counties and cities," CAWM Discussion Papers 57, University of Münster, Münster Center for Economic Policy (MEP).
    18. Michelle Harter-Dreiman, 2003. "Drawing Inferences about Housing Supply Elasticity from House Price Responses to Income Shocks," FHFA Staff Working Papers 03-02, Federal Housing Finance Agency.
    19. Markus K. Brunnermeier & Christian Julliard, 2008. "Money Illusion and Housing Frenzies," The Review of Financial Studies, Society for Financial Studies, vol. 21(1), pages 135-180, January.
    20. Christopher J. Mayer & C. Tsuriel Somerville, 1996. "Unifying empirical and theoretical models of housing supply," Working Papers 96-12, Federal Reserve Bank of Boston.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:sae:urbstu:v:49:y:2012:i:7:p:1435-1451. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: SAGE Publications (email available below). General contact details of provider: http://www.gla.ac.uk/departments/urbanstudiesjournal .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.