Association for Public Policy Analysis & Management

Using a natural experiment in Singapore, we examine the economic impact of temporarily restricting an owner’s right to transfer his property. Executive condominiums (ECs) introduced to address housing affordability for middle class are subject to restrictions on their transferability within the first ten years unlike private condominiums. Among transacted units carefully matched by their location, completion and transaction dates, and complex- and unit-level characteristics, we find that selling prices of new EC units are about 17.23% lower than their counterpart private condominium units. After the fifth year when EC owners can sell their units to domestic residents but not to foreigners, the price gap between ECs and private condominiums narrows to about 10.88%. Finally, the prices of ECs and private condominiums converge after the tenth year when all the restrictions on private property rights are removed. These results suggest that placing property right restriction and complete illiquidity for a temporary period has a significant, negative impact on property prices for this period. An implication for affordable housing policies is that middle-class beneficiaries enjoy both initial price discount and potential price appreciation.