Sunday 1 May 2016

[Bukit Batok By-Election] Have you heard of the Opposition Effect?

Have you heard of the Opposition Effect?
As the Bukit Batok By-Election draws near, many people are talking about the by-election effect where voters would vote for the opposition as the outcome would not make a difference as to who formed the Government. This by-election effect is real, as the PAP has lost all of them in the recent years. But wait, have you heard of the opposition effect?
The opposition effect is where HDB property prices fall as a result of being in an opposition ward. While WP’s Low Thia Khiang went to great lengths to dispel this, online data from HDB’s resale portal tells a different story.
opposition effect bukit batok by-election

Using Potong Pasir as the example, let us compare the prices of HDB units sold. Unfortunately, Potong Pasir is a small SMC, so there are only a handful of transactions for the last 12 months. Small in sample size, but nonetheless sufficient to provide us with an indication.
Example 1 – Same Blk
There were 2 transactions for units of similar size. Unfortunately, there were on different levels.
After GE 2015
Blk 115 4 to 6 Floor
 93 SqM
$420,000
Feb 2016
Before GE 215
Blk 115 7 to 9 Floor
93 SqM
$380,000
July 2015

What is significant is that a unit on a lower floor sold for $40,000 more. If you factor in the premium for higher floors, the difference is significant.

Example 2 –Same Size Same Floor
There were a total of 4 transactions for units of same size on similar floors.
After GE 2015
7 to 9 Floor
93 SqM
$405,000
November 2016
Before GE 215
7 to 9 Floor
93 SqM
$380,000
July 2015

After GE 2015
7 to 9 Floor
104 SqM
$560,000
October 2016
Before GE 215
7 to 9 Floor
104 SqM
$525,000
May 2015

Once again, the data shows that units on similar floors of similar size sold for more after the PAP won the ward back from the opposition.The Opposition Effect is real! If you don’t believe us, just ask your property agents. They will tell you that there are a group of Singaporeans who will never buy a HDB flat in opposition run wards.
So residents of Bukit Batok, as we already have the Worker’s Party in Parliament, having Chee Soon Juan will not make any significant difference to democracy. But it make a difference to the value of your property.

3 comments:

  1. These effects are real. And they are created by misguided, misinformed people behaving irrationally. Only way is to convince these people and be guided by integrity and just, not fear.

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  2. All statistical analyses were conducting using R (R Development Core Team 2011). R is an open source statistical environment which is used in academic as well as industrial research and modelling.

    Authors: Chong Kwek Yan & Giam Xingli
    Feel free to repost. Statistical code and dataset (publicly available anyway) are available upon request.

    Update (5 May 2011; 3:50pm EST):

    Khaw Khai Min sent me this paper published in the Journal of Housing Economics (http://courses.nus.edu.sg/course/ecswong/publications/JHE.pdf). Please take your time to read it. The analysis involved more predictors (e.g., distance from good schools, distance from industrial estate, distance from bus interchange, distance from MRT) and found a significant difference between prices of flats in Hougang SMC and those in Aljunied GRC. Another main difference is that the JHE study (Sue & Wong 2010) used resale price data for 2001-2006, while we are using the publicly available data for the past year (also the data Mah Bow Tan used). Sue & Wong also analysed subsamples of the data (of increasing buffer widths along the boundaries) - nice idea but that may have implications on the results, need to think more about it.

    Update (5 May 2011; 10:00pm EST):

    Today posted a reply by MND – listing location (i.e., distance from amenities like MRT stations) as the main factor. http://imcmsimages.mediacorp.sg/CMSFileserver/documents/006/PDF/20110506/0605HNP016.pdf

    Kwek and I are planning a reply perhaps by tomorrow – but we need more data and add in distance from MRT as a covariate. Thanks everyone for your kind comments.

    Update (6 May 2011; 9:32pm EST):
    The Chinese version of the letter was published in Zaobao: http://www.zaobao.com/yl/yl110506_003.shtml.

    Update (25 May 2011)
    See our reply to HDB in Today Voices: http://www.todayonline.com/Voices/EDC110520-0000203/Clarifying-those-price-differences

    ReplyDelete
  3. What's the point of the price of your property appreciating if you only have one and living in it?
    If you have only one property and living in it, it is not an asset; it is a liability. Unless you are thinking of emigrating.
    We would rather that the price of our HDB stay steady and low so that when the time comes our children can also afford to buy their own.

    Of course it would be ideal if your children can live with you after their marriage, but that is a story for another time.

    ReplyDelete