Analysis of the effect of government regulations on the Singapore property market.

Abstract

This project aims to investigate the effect of government regulation on the property market in

Singapore. It utilizes time series models to analyse property prices and housing demand from

the 4th quarter of 2004 to the 3rd quarter of 2012. Results from the analysis are used to

examine time periods where government measures are introduced. Our analysis shows that

there was no significant effect on demand and price from the regulation that was introduced

in 2005Q3. The regulation introduced in 2006Q4, similarly did not show any noteworthy

effects subsequently leading to the boom-bust cycle in 2007. The year 2009 saw the highest

increase in housing demand and a significant increase in property prices although a number

of new regulations were introduced to slow demand. However, the measures that were set up

after 2009 were able to maintain the demand and price at a constant level. The influential

factors that typically affect the housing prices and demand in Singapore include level of

interest rate, population density and the reliability of housing properties as investments. More

significantly the influx of foreigners into Singapore as it was developing into a regional

financial hub led to the boom-bust cycle bringing about the property bubble and the

consequent burst of it during the Great Recession.