An Empirical Evaluation of OLS Hedonic Pricing Regression on Singapore Private Housing Market

The empirical paper studies the relationship between property value and hedonic attributes. To identify the determinant characteristics the influent the private real estate price, their degrees of significance and help with the valuation procedure, 8870 private residential property transactions with caveats lodged across the country are selected from Urban Redevelopment Authority of Singapore. 40 models are tested and RMSE, R-Square, Adjusted R-Square, F-Value tests are performed to discover the overall fitness of the models. Breusch-Pagan F-Test is performed to test the existence of heteroskedasticity and VIF test to check multicollinearity. Z score is performed to check the spatial autocorrelation. Three founding are discovered. Firstly, size, age, floor level, population density level, latitude and construction status are core attributes resulting from the regression. Secondly, new district zones classified by functions are detected instead of 28 administrative districts. Thirdly, government policies and local customs (Feng Shui) are proven to be determinant variables as well. Two suggestions are given to regulate the market at the end of this article.

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Singapore