Macroeconomic Policies, Behavioural Responses to the Government’s Interventions into Private Housing Markets
Singapore’s government introduced a slew of cooling measures ranging from macro-prudential measures to imposition of seller’s stamp duties (SSD) and additional buyer’s stamp duty (ABSD) between 2010 and 2013 aimed at restraining irrational and speculative housing activities. In addition, the government also uses the supply-side strategies via the sales of state lands to regulate the supply-demand imbalances in the housing markets. The supply side strategies are usually implemented first in the hot market before the demand side interventions are implemented.
Objectives of the Study
The unsustainable price momentum is not in line with the government’s objectives of keeping a sustainable and stable housing market. The government intervenes into the market to restore the overheating market back to normality. The proposed project studies the dynamic relationships between macro-economic policy shocks and housing prices, and behavioural responses of individuals to the shocks in the housing market.
The three broad objectives are as below:
- To study the effectiveness of cooling measures in curbing escalating prices in the housing markets;
- To examine behavioural changes of different stakeholders including developers, individual sellers and buyers in response to the cooling measures; and
- To evaluate potential spill-over impact of housing price declines, if any, on general economies and labor markets.
We propose to conduct empirical tests on three research questions using housing market and other macro- and micro-economic data:
- Have the cooling measures been equally effective in curbing the escalating housing prices?
- Does the concurrent ownership restriction have asymmetric effects on housing owners, and investors?
- Are there unintended economic consequences associated with “depressed” or “sluggish” housing markets?