Are Property Prices affected by who you vote for?

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Recently, Minister Mentor Lee Kuan Yew mentioned that the property prices of Aljunied GRC will go down if the voters of that constituency vote for the opposition. In his words, “If you have the wrong government, your property prices go right down. Ask why in Hougang the property is not as high as their neighbours.” Given the residents of Hougang SMC has been voting for Mr Low Thia Khiang for the past 20 years and assuming Mr Lee’s comments to be true, the direct inference is that the value of the HDB flats for the Hougang SMC should now be far lower than similar flats in the same neighborhood placed under Aljunied GRC.

The best way to do this is to find out how the prices of the HDB flats in Hougang SMC and Aljunied GRC have fluctuated over the past twenty years. This dataset is difficult to collect and requires HDB to provide them. However, it turns out that we can look at the current 1-year resale transacted prices of flats in both areas and answer the question to a large extent. The aim of this HDB e-service is to “assist potential resale flat buyers and sellers in making informed decisions, taking into account the prevailing trends in the HDB resale market” (source: HDB). So, we did the following by looking at 2 sets of data: 3 room flats & 4 room flats from Hougang Ave 5 (under Hougang SMC) and Hougang Ave 8 (under Aljunied GRC) and computed the median prices. All transactions found in the data set are arms-length transactions which means that we exclude resale transactions that may not reflect the full market price, for example, I buy a flat from my parents at a reduced resale flat price. Hence HDB’s data is indicative of the real market prices. Here’s what we found:

From the above table, the resale flat prices did not vary signifcantly. In fact, although flats from Hougang Avenue 5 (under Hougang SMC) were older than those from Hougang Avenue 8 (under Aljunied GRC), they seem to fetch higher resale prices. Do note that the Ministry of National Development control both the demand and supply of public housing in Singapore. We all know that buying a flat is an important decision for most families. Hence it is reasonable for us to assume that a couple will examine all the factors which will affect the value of the flat they intend to buy, for example, accessibility to transport, amenities, the condition of the flat and the living conditions in the neighbourhood. If MM Lee’s assertion is true, very few people will buy flats in Hougang Ave 5 and consequently the resale prices of flats in Hougang Ave 5 should not be above those in Hougang Ave 8 under Aljunied GRC. The data seems to contradict what MM Lee has said about flats in Hougang SMC falling below flats in Aljunied GRC. Perhaps the ruling party can provide the facts and figures as to why they assert that property prices under Aljunied GRC will fall if the opposition party wins on May 7.

Other Interesting articles:
[1] Mr Wang, Property Values and Your Choice of Political Party
[2] Sze-Meng Soon, How Govt and MPs should tackle home affordability
[3] Tay Lay Kuan has extended my analysis http://bit.ly/lJb5PM on Hougang & Aljunied to Potong Pasir SMC & Toa Payoh-Bishan GRC. No evidence in MM Lee’s claims on HDB prices.
[4] You can read this research paper “The political economy of housing prices: Hedonic pricing with regression discontinuity” by Wong Wei Kang and Eddie Sue. Have a conversation with my former colleagues from Singapore Angle and the main results does not differ much from what I have computed.
[5] You can read another post Hougang constituency 4-room flats retain value well by Alex Au aka Yawning Bread that also indicate the prices for 4 room flats.
[6] Chong Kwek Yan & Giam Xingli published this interesting analysis entitled “No evidence that flats in Opposition-held wards are worth less” via Facebook using multiple comparisons tests. If I am still working as an academic (i.e. I practically have very little time because of the focus I put on my own start-up), that will be the same approach that I will have adopted and I will apply clustering theory to look at the data sets as well.

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Bernard Leong

A Pragmatic Idealist

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27 thoughts on “Are Property Prices affected by who you vote for?”

  1. Excellent analysis, Bernard.

    It is a shame that the PAP continues to pull wool over our collective eyes with their arrogance.

    If, as Singaporeans, we want to have a government that is accountable to us, the citizens, we need to force the issue via the ballot box. Let’s make that happen.

  2. how did prop value in Hougang SMC vary before and after 1991 , compared to Aljunied GRC ?

  3. Thank you Bernard.

    I now have doubts as to whether the figures from HDB are not true or MM has got his facts incorrectly. This is a serious issue as the party who is wrong would have mislead Singaporeans.

  4. If my parents bought a BTO for $400,000 ten years ago, and I have to pay $600,000 now for the same flat, I am actually paying for the “enhanced asset”. Indeed, I am transferring my money to my parents. So, what is this asset enhancement? Nonsense.

  5. It would be interesting to look into that closer. e.g., closeness of facilities, distance from major transport and other things that also dramatically affect housing prices. But interesting analysis I have to agree. Would be interesting to see how that would fair using Potong Pasir and it’s neighbour.

  6. I’ve always known that it is the location, amenities etc that affect the resale prices. I stay in Woodlands (under PAP) but my HDB price is so much lower than Hougang. No point just posting it here, how many Aljunied GRC voters read this? Perhaps WP can state all these prices during their rallies to tell Aljunied GRC voters. It will be better.

  7. LOL Bernard, tsk tsk did someone shout the Emperor is not wearing clothes?

    However, the limited records also suggest higher sales in the PAP GRC i.e. more people want to buy units there and units in the Hougang SMC are harder to let to go. However it could mean the other thing of course – people in the PAP GRC want to sell and get out of the area while the Rebel Scum on Alderaan love their homes and don’t want to sell it!

    LMAO Nonetheless, again from the limited info, one point is relatively indisputable – 4-rooms in the PAP GRC are more expensive / more “value” while 3-rooms in the WP SMC are less expensive / less “value” (“value” is naturally subjective depending on buyer, seller etc).

  8. LOL Bernard, tsk tsk did someone shout the Emperor is not wearing clothes? Orrrrrrrrrrrrr

    However, the limited records also suggest higher sales in the PAP GRC i.e. more people want to buy units there while units in the Hougang SMC are harder to let to go. However it could mean the other thing of course – people in the PAP GRC want to sell and get out of the area while the Rebel Scum on Alderaan love their homes and don’t want to sell it!

    LMAO Nonetheless, again from the limited info, one point sticks out – 4-rooms in the PAP GRC are more expensive / more “value” while 3-rooms in the WP SMC are less expensive / less “value” (“value” is naturally subjective depending on buyer, seller etc).

    1. Actually, the reason for more sales in Hougang Ave 8 are probably b’cos there is a larger total number of flats in that avenue as compared to Hougang Ave 5 – Ave 5 in total within Hougang SMC has about 60 blocks I think. Hougang Ave 8 being a much longer stretch, I would guess that there are more than 60 blocks.

        1. http://www.hougang.org.sg/html/htc_map.html – this shows what would fall within WP’s area. The rest of Hougang would be PAP (could be Aljunied or Ang Mo Kio GRC – not sure if any part of Hougang is still left under Pasir Risk Punggol after they moved the Hougang Street 91 area into Ang Mo Kio GRC this time).

  9. I asked my friend who is a ppty agent. She said that Opp constituencies flat more difficult to buy coz nobody want to sell. Pls check w other agents to see if they also say the same.

    Clear evidence that Opp capture ppl’s hearts better.

  10. No. is not affected at all, don’t believe go to HDB website and check the 5resale price for Potong Pasir you will surprise that 3rooms flat there is 300K++ despite no upgrading. is the location that people take into consideration more and not the MP.

  11. Without even looking at transacted prices, its obvious that the resale value of potong pasir flats are not as high as flats from neighbouring estates. Only 1 feeder bus serves potong pasir, and there are only 2 major access roads into the area. How civil of the ruling party. Screwed up PAP.

  12. Isn’t it to simplistic to compare only Hougang Ave 5 and Ave 8, which are only a few streets apart.
    To a potential buyer, they will still be considered as under Hougang…

    “the voiddeck” commented that higher sales in PAP GRC means more people “wants to get out”.
    But can you make a sales without buyers?
    Then does it also mean that more people “wants to get in”?

  13. I stayed in hougang for the past 12 years and my mum has been a property agent for the past 10 years. Our property had been to slow to upgrade and little empahsis has been put on citizens welfare. For the past 12 years none of the Worker’s Party members have done a house visit to my apartment nor any aparments within the next 5 blocks. Constant complaints on the cleanliness of the block have went unheard and up till today none of the apartments within the 5 blocks radius had any significant increase in their value/prices! I truly believe the need for opposition to keep the PAP or any ruling party in check. (I do think that PAP is getting complacent) however, the next question is do we trust the opposition to run our country? They have thus far raise excellent issues in which the commoner is facing but what are their ‘real’ solutions and if they are feasible at all? Will the solutions be in fact worse or even detrimental to the growth of this nation/country with limited resources when the rest of our neighboring countries catch up?

    1. I don’t think you need to answer that ‘next question’ anytime soon. Realistically, there is zero chance that the PAP will fail to get a majority in Parliament in this election. It will be 4-5 more elections yet before there’s a significant chance of their losing their majority. By then, there will be a new slate of non-PAP politicians to choose from, and hopefully the experiences of the parties in the interim would have strengthened them.

      The various parties’ policy proposals can be found in their manifestos, which are all online. I encourage people to read them and critique the detailed proposals made in them, rather than simply raise vague, unarticulated fears about whether their recommendations are feasible.

  14. Hi Bernard,

    I refer you to a paper written by Wong Wei Kang and Eddie Sue from the NUS Department of Economics. They answer this question rigorously using 3 years worth of HDB resale data and control for locational and physical characteristics of the flat.

    You can access the article here.

    http://courses.nus.edu.sg/course/ecswong/publications/JHE.pdf

    All of you will find it very interesting and highly relevant =)

  15. Hi Dr Leong,

    With all due respect, this is too simplistic to be a credible analysis of HDB prices. I hope you can at least indicate as such, instead of making the claim that the limited data you have “answer the question to a large extent”. It’s the responsible thing to do.

    The published article posted by StubsHamster is far more rigorous study of the issue.

    But I agree with you that the PAP should provide evidence of their claims.

    Cheers!

  16. The mininster issued a statement today saying that Aljunied flats are 3-16% higher than hougang flats, will you be relook at your data?

    1. Here is probably what I need the minister to provide: the entire dataset for the Aljunied and Hougang flats in the past 5 years with the resale prices of each category. The dataset I got from HDB is on 3 room and 4 room flats, and from the analysis, it is clear that the prices have not changed. There is one possibility that there are private property (condos and houses) and 5 rooms, executive flats built in Aljunied, which might raised the entire estate to 3-16%.

  17. To quote Mark Twain: “Facts are stubborn, but statistics are more pliable”.

    Perhaps the fact that (presumably sane) voters in Hougang have been supporting the opposition for 20 years should be a better indicator of acceptable housing prices in the area than the frankly sleep-inducing paper by Wong Wei Kang and Eddie Sue (no offense intended to the authors).

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