Space in a pandemic

Abstract

The COVID-19 pandemic has given rise to a wave of new challenges, as movement restrictions necessitated the use of the home as a place to live, work and play. The disruptions brought about by COVID-19 begs the question: How has COVID-19 affected the housing market? Existing literature on the housing market in Singapore focus on heterogenous housing characteristics as determinants of housing prices in hedonic pricing models. However, there remains a research gap on the effects of exogenous shocks on HDB resale prices. This paper contributes to the literature by exploring the impact of COVID-19 on the HDB resale market in Singapore and investigates the possible mechanisms that drive the demand for housing space in a pandemic. The analytical framework has two parts. Firstly, a difference-in-differences model was employed to identify the impact of COVID-19 on the HDB resale market. Next, OLS regressions were conducted under the contingent valuation framework to estimate the willingness to pay for dwelling space amid COVID-19 restrictions. The evidence suggests that COVID-19 has resulted in greater demand for larger HDB resale units, and households living in smaller flats were willing to pay $81.37 more for external workspaces in a pandemic. Overall, the higher demand for larger housing units could have been driven by the inconvenience of remote work and learning.