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.