IS428 2016-17 Term1 Assign1 Jonathan Eduard Chua Lim
Contents
Abstract
Private property in Singapore is less regulated than public housing.. As such, the private property market has less barriers for Singaporeans and foreigners who wish to purchase private property, assuming that they have the financial means to do so. With many Singaporeans choosing to buy private properties for “investment” as opposed to “necessity”, is it justifiable for private properties in Singapore to be priced at their current prices, with respect to the supply of private property? Should the government let market forces take its course, or intervene in order to prevent a housing bubble, that may result in the sudden depreciation of property value when the bubble “bursts”?
Problem and Motivation
Housing purchase in Singapore is seen as one of the most important decisions that any Singaporean will make in their lifetime. A shelter on top of one’s head is one of the fundamental human needs that humans have, alongside water and food for sustenance. As a result, purchasing a house becomes a major decision that requires the consideration of many factors . At times, having a house that is ready for occupancy can be a turning point for the couple who is about to start a family, or a family with children who are moving from one neighbourhood to another.
One of the key aspects that people think about is the price of the house they are about to purchase. In Singapore, the housing price is important because the couple or family will determine their preferred price based on their salary or CPF savings, among other factors. Personally, this is very relevant as my family recently bought a house in the past 2 years, and one of the most important factors we needed to consider was the price of the house we were going to buy, and whether it was “affordable” – i.e. if our current income levels could support this important decision.
Alternatively, Singaporeans also make housing purchases as a form of investment, especially since it is able to generate passive income monthly from the rental fee that a tenant pays the landlord. As a form of investment, potential house buyers will need to ask themselves if a particular house, in a certain locality and price, is worth the investment? Will this particular unit have a strong demand from potential tenants? These questions are important as it will determine the rental fee that a landlord charges a tenant, and how quickly the landlord can obtain his/her investment money back.
Linking my thought process to the task at hand, I wanted to find out the current stock (or supply) of private property by the different categories, and find out how much are we paying for these houses at the different planning regions in Singapore. I would like to find out ifSingaporeans are paying adequately for the private property housing in a particular locality, and for their chosen category of private housing.
Approaches
I obtained the private property data from the Urban Redevelopment Authority (URA) REALIS database, which contains property information and transaction prices for Residential, Commercial and Industrial. For the purpose of this study, the focus will be on residential, in particular private property residential information.
Main Variables: I will test these variables to get insights to the questions at hand:
1. Private Property Stock – as defined from REALIS Data Dictionary, stock is interpreted as “Completed units or space, whether occupied or unoccupied, that is available for physical occupation”
2. Private Property Types – The private property types that I will be looking at are: Apartment, Condominium, Semi-Detached, Detached and Terrace housing.
3. Median Price – I have obtained the median price from the REALIS website, for the respective private property types, and based on their respective planning regions
4. Planning Regions – These are the main regions in Singapore. These regions are: Central, East, North, North East and West.
Key Assumptions
When I was gathering the data from the REALIS database, I made a few assumptions:
1. The data does not include units that has undergone “Enbloc” (or units of houses that have been sold to a single owner)
2. This does not include Executive Condominium (EC). My thought process is that ECs are still managed by the Housing and Development Board (HDB) and thus do not function fully as a private property.
3. The time frame stated for the data gathering is the 4 Quarters of the year 2015, as per the question requirements.
Tool Utitised
For this project, I made use of these tools to create my Data Visualisation
Data Cleaning - Microsoft Excel
I used Microsoft Excel to convert the file downloaded from REALIS database (.csv file type) and convert it to (.xlsx file type) so that the data can be cleaned properly.
Data Visualisation - Tableau
Once the Dataset was uploaded to Tableau, I used the functions in Tableau to generate my visualisation and assist me in answering the questions provided for this assignment.
Infographic Creation - Piktochart
I utilised Piktochart to combined all my different visualisations in one page, and to have a short description of it.
Results
Identify three patterns of the share of the private properties supply in 2015
1) Condominium shows the biggest increase in available stock.
Condominiums sit on strata land, which makes it suitable for multiple owners in a particular plot of land. Hence, one plot of land can have many condominium units.
2) There is also a gradual increase in available stock for Apartments Categorically, the difference between condominiums and apartments is that apartments have lesser amenities than condominiums, and are generally smaller in scale. Between the first and second trend, it could be identified that private property house buyers are more interested in condominiums rather than apartments.
3) Landed property, namely Terrace, Semi-Detached and Detached housing stock remained flat for the 4 quarters. This result is to be expected, as Singapore is a land scarce country with set amounts of land t for landed property development. One of the reasons for this stagnation is that there is only limited amount of land dedicated to Landed Property, regardless of whether it is individually owned or strata-owned.
Identify three patterns of the distribution of the private properties prices in 2015
1) Apartment and condominium prices are similar across the different planning locations in Singapore
This is an interesting insight. From the earlier trend of Condominium and Apartments, their prices are seen as similar. Initially, I thought that Condominiums would have higher prices because of the “value add” that can be seen from its possible amenities and services.
2) Detached Houses in the Central region is the most expensive out of the different types of housings, and comparatively to other locations.
This result is to be expected, as the closer the house is to the Central Region in Singapore, the more expensive it is. There is a significant difference of the prices between the private properties in the Central Region compared to the other regions. For instance, the median price of Detached Housing in the Central Region is about 50% more than the median price of Detached Housing in the North East region.
3) The Median Prices for Semi-Detached Houses in the Central Region have been close to half of the prices for Detached Houses in the same region.
Due to the high prices of Detached Housing in the Central Region, it could be a possibility that many turned to purchasing Semi-Detached housing instead.
I also found some miscellaneous information from the Visualisation:
1) There is missing data from the “Detached housing” category for Planning Regions North and West of Singapore. The reason for the missing data is not stated, although it could mean that there were too few transactions in those areas for Detached Housing, so a proper median transacted price could not be obtained.
Policy Recommendations
With reference to the findings, these are my policy recommendations for private properties for the year 2016.
1)The Government needs to continue to closely monitor the demand for private housing and release plots of land for private property development based on the current stock of private property and prices.. This is to cater to the different preferences of private property housing of Singaporeans, and to also ensure that the prices do not go too high as a result of a low supply of private property houses.
2) The Government needs to monitor land-usage and maximise the land-usage. Being a scarce country, there needs to be proper usage of the land in Singapore. The Government can do this by perhaps releasing more strata land that can be used to build condominiums, apartments and even strata landed property.
3) Finally, the Government could give out more landed property plots to the West and North regions of Singapore. This is because that the prices of such property will be affordable for the home buyer, compared to if the government gave out more land in the Central region. This is to ensure that these locations get developed and there will be lesser cases of the government giving out land plots, but no house buyer wanting to purchase and build on it.
Infographics
