Land Policies and Market Efficiency (PI: SING Tien Foo)
Land is a scarce resource in Singapore. Singapore’s government uses land supply as a policy tool to regulate excessive property price movements in overheating private markets. As the land supply is inelastic, the impact of land supply on property price dynamics increases proportionally with the land price to property price ratio, which is also known as “land leverage” (Bostic et al, 2007).
Objectives of Study
This proposed research aims to examine the two potential sources of inefficiency in land markets, which include land holdings and oligopolistic market structure. Developers use land holding (or hoarding) strategies to time the market and deliberately defer a development for speculative motives, (Zhang et al, 2015). Few large developers in an oligopolistic market use their market power to distort prices in the private property markets. These two factors causing inefficiency in the land market have been widely examined in the urban economics and real estate literature; However, studies on the topics using Singapore’s land markets and housing market data have been relatively limited.
There are three research questions explored in this study:
- Do developers’ land hoarding activities increase price volatility in the private residential property markets?
- Do developers use information advantages to influence prices in both land and property markets?
- Do high land prices significantly increase housing price volatilities, which also influence developers’ optimal development timing for vacant lands?
The broad research framework is represented below:
