Household upward Mobility to Private housing in Singapore

While housing shortage and overcrowding are acute problems faced by many Asian countries, such issues are concerns of the past for Singapore with the completion of more than 800,000 public housing units for some 86% of the population by the Housing Development Board (HDB) since its establishment in 1960. From problems of housing shortages in the 1960s to mid 1970s, the issue had changed to one of acquiring home ownership in the 1970s and 1980s. Fuelled by rapidly increasing income levels of the population and the commitment of the government in encouraging home ownership, Singapore currently has one of the highest home ownership rates in comparison with several countries. About 90% of public housing dwellers now own the flat they live in. With basic housing needs met and the population becoming more affluent, the current focus has switched from home ownership to home upgrading in the 1990s. This is very much distinct from the Western world where the concern is primarily the household decision to rent versus owning. The desire to upgrade to private property with the concomitant quality living with better facilities has become the Singapore dream. The typical path towards ownership of private property is to first purchase a HDB public housing flat, then upgrade to private property subsequently. Based on a primary micro-data set of about 3,800 households, this paper examined rigorously the impact of household-specific, financial, property-specific and location factors on the probability of upgrading from public to private property by appealing to the discrete probit choice model. The evidence clearly shows that Chinese households in professional/executive/managerial jobs, with higher income and school-going children are more likely to upgrade. The probability to upgrade is also positively correlated with the affinity to move. In addition, after controlling for household income, owners of smaller HDB room types (such as the 3-room and 4-room) have a surprisingly greater propensity to upgrade, when compared to those from the 5-room flats. Relative to households staying in the North, those living in the West, North-East and East regions are more inclined to upgrade. On the other hand, centrally-located households with older heads and living in larger flats like the executive flats exhibit greater inertia to upgrade.