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Humboldt-Universität zu Berlin - High Dimensional Nonstationary Time Series

IRTG1792DP2019 001

Cooling Measures and Housing Wealth: Evidence from Singapore

Wolfgang Karl Härdle
Rainer Schulz
Taojun Xie

Abstract:
Excessive house price growth was at the heart of the financial crisis in
2007/08. Since then, many countries have added cooling measures to their
regulatory frameworks. It has been found that these measures can indeed control
price growth, but no one has examined whether this has adverse consequences for
the housing wealth distribution. We examine this for Singapore, which started in
2009 to target price growth over ten rounds in total. We find that welfare from
housing wealth in the last round might not be higher than before 2009. This
depends on the deflator used to convert nominal into real prices. Irrespective
of the deflator, we can reject that welfare increased monotonically over the
different rounds.

Keywords:
house price distribution, stochastic dominance tests

JEL Classification:
R31, C31, C55