This paper provides a rigorous study on the change in Central Provident Fund (CPF) policy in Singapore on 1 September 2002, on household mobility in general and on the affordability and accessibility of potential home-buyers in particular. The change brought about increased accessibility but reduced affordability for home-buyers. The latter has an impact on the shortfall months which are positively related to changes in mortgage rate, mortgage term and property price and negatively related to the amount of CPF available for home purchases. Further, the low critical price that households can afford without experiencing any shortfall implies that the majority of public and private home-buyers will be affected by the policy change. Consequently, the improvement in accessibility by allowing the use of CPF for downpayment may stimulate demand at the cost of higher financial risk to home-buyers and mortgage lenders.
Get full access to this article
View all access options for this article.
References
1.
Anhs (1991) The affordability of Australian housing, Australian National Housing Strategy Issues Paper No. 2, AGPS, Canberra.
2.
Berkovec, J. and Fullerton, D. (1992) A general equilibrium model of housing, taxes and portfolio choice, Journal of Political Economy, 100(2), pp. 390-429.
3.
Blackley, P. and Ondrich J. (1988) A limiting joint-choice model for discrete and continuous housing characteristics, The Review of Economics and Statistics, 70(2), pp. 266-274.
4.
Borsch-Supan, A. (1987) Econometric Analysis of Discrete Choice: With Applications on the Demand for Housing in the U.S. and West Germany. Berlin: Springer-Verlag.
5.
Brueckner, J.K. (1986) The downpayment constraint and housing tenure choice: a simplified exposition, Regional Science and Urban Economics , 16, 519-525.
6.
Census Of Population 2000 (2001) Demographic Characteristics. Singapore: Department of Statistics.
7.
Chu, B.H. (2000) Public housing residents as a clients of the state , Housing Studies, 15, pp. 46-60.
8.
Clark, W.A.V., Deurloo, M.C. and Dieleman, F.M. (1990) Household characteristics and tenure choice in the U.S. housing market, Netherlands Journal of Housing andEnvironment, 5(3), pp. 251-270.
9.
Curran, C., Carlson, L.S. and Ford, D.A. (1982) A theory of residential location decisions of two worker households, Journal of Urban Economics, 12, pp. 102-114.
10.
Eastaway, M.P. and Martin, I. San (1999) General trends in financing social housing in Spain, UrbanStudies, 36(4), pp. 699-714.
11.
Freedman, O. and Kern, C.R. (1997) A model of workplace and residence choice in two-worker households, Regional Science and Urban Economics, 27, pp. 241-260.
12.
Fu, Y.M., Tse, D. and Zhou, N. (2000) Housing choice behaviour of urban workers in china's transition to housing market, Journal of Urban Economics, 47, pp. 61-87.
13.
Hegedus, J. and Varhegyi, E. (2000) The crisis in housing financing in Hungary in the 1990s, UrbanStudies, 37(9), pp. 1619-1641.
14.
Horioka, C.Y. (1988) Tenure choice and housing demand in Japan, Journal of Urban Economics, 24(3), pp. 289-309.
15.
Ioannides, Y.M. (1987) Residential mobility and housing tenure choice , Regional Science and Urban Economics, 17, pp. 265-287.
16.
Ioannides, Y.M. and Kan, K. (1996) Structural estimation of residential mobility and housing tenure choice, Journal of Regional Science, 36(3), pp. 335-363.
17.
Johnson, M.S. (1981) A cash flow model of rational housing tenure choice , Journal of AREUEA, 9, pp. 1-17.
18.
Knight, J.R. and Eakin, C.F. (1998) A new look at the homeownership decision, Real Estate Issues, 23(2), pp. 20-29.
19.
Lea, M.J. and Bernstein, A.S. (1996) Housing finance in an inflationary economy: the experience of Mexico, Journal of Housing Economics, 5, pp. 87-104.
20.
Mackay, C. (1999) Housing Policy in South Africa: the challenge of delivery, Housing Studies, 14(3), pp. 387-399.
21.
Maclennan, D. (1982) Housing Economics: An Applied Approach. London, Longman.
22.
Macpherson, D.A. and Sirmans, G.S. (1999) Forecasting seniors housing demand in Florida, Journal of Real Estate PortfoLioManagement, 5(3), pp. 259-274.
23.
Madden, J.F. (1981) Why women work closer to home, UrbanStudies, 18, pp. 181-194.
24.
Ong, S.E. (1998) Affordability and the threshold buyer: effect of interest rate and CPF changes on property prices, The Real Estate Times, 1(2), pp. 79-85.
25.
Ong, S.E. (2000) Housing affordability and upward mobility from public to private housing in Singapore, International Real Estate Review, 3(1), pp. 49-64.
26.
Ong, S.E. and Sing, T.F. (1999) The threshold upgradability index, The Real Estate Times, 2(1), pp. 14-20.
27.
Ong, S.E. and Sing, T.F. (2002) Price discovery between private and public housing markets, Urban Studies, 39(1), pp. 57-67.
28.
Paulin, G.D. (1995) A comparison of consumer expenditure by housing tenure, The Journal of Consumer Affairs, 29(1), pp. 164-198.
29.
Perloff, J.M. (1991) Choice of housing tenure and wage compensation of hired agricultural workers, Land Economics, 67(2), pp. 203-212.
30.
Phang, S.Y. (2001) Housing policy, wealth formation and the Singapore economy, Housing Studies, 16(4), pp. 443-459.
31.
Phang, S.Y. and Wong, W.K. (1997) Government policies and private housing prices in Singapore, UrbanStudies, 34(11), pp. 1819-1829.
32.
Priemus, H. and Dieleman, F. (1999) Social Housing Finance in the European Union: Developments and Prospects, UrbanStudies, 36(4), pp. 623-631.
33.
Renaud, B. (1999) The financing of social housing in integrating financial markets: a view from developing countries, UrbanStudies, 36(4), pp. 699-714.
34.
Rosenthal, S.S. (1988) A residence time model of housing markets, Journal of Public Economics, 36, pp. 87-109.
35.
Sing, T.F. (2001) Dynamics of the condominium market in Singapore, InternationalReal Estate Review, 4(1), pp. 135-158.
36.
Teo, S.E. and Kong, L. (1997) Public housing in Singapore: interpreting 'quality' in the 1990s, Urban Studies, 34(3), pp. 441-452.
37.
Tu, Y. (1999) Public homeownership, housing finance and socioeconomic development in Singapore, Review of Urban and Regional Development Studies, 11(2), pp. 100-113.
38.
Tu, Y. and Wong, G. (2002) The impacts of public resold dwellings on the private housing prices: Singapore experiences. Working paper, CRES: 2002-004, Department of Real Estate, National University of Singapore.
39.
Tu, Y., Yuen, B. and Kwee, L. (2002) Modelling Singapore households' social mobility behaviour: from public homeownership to private homeownership. Working paper, CRES: 2002-003, Department of Real Estate, National University of Singapore.
40.
White, M.J. (1977) A model of residential location choice and commuting by men and women workers, Journal of Regional Science, 17(1), pp. 41-52.
41.
Yuen, B., Teo. H.P. and Ooi, G.L. (1999). Singapore Housing: An Annotated Bibliography. Singapore: National University of Singapore .
