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Relationship Between the Housing Vacancy Rate, Housing Price, and the Moving Rate at the Township Level in Taiwan, in 1990 and 2000

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  • Li-Min Hsueh

    ()
    (Department of International Business, China University of Technology, 56,Section 3, Hsin Lun Road, Wen-sun District, Taipei, Taiwan)

  • Hsi-Peng Tseng

    (Department of Travel Management, Ching-Wen Institute of Technology)

  • Chang-Chiang Hsieh

    (National Taiwan University)

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    Abstract

    In this research, cross-sectional data for the township level obtained from the 1990 and 2000 Population and Housing Census are used to study the phenomenon of high housing vacancy rates in Taiwan. Three simultaneous equations for housing price, vacancy rate, and moving rate are derived and estimated using 3SLS. The estimation results show that, in 1990, in a booming market situation, both expected housing price and current housing price had a strong, positive impact on the vacancy rate; however, the housing vacancy rate did not display a negative impact on housing price as expected. The results for 2000 show that housing price did not significantly affect the vacancy rate; however, the vacancy rate had a negative impact on housing price that was highly statistically significant. This result reflected the fact that housing market operation had swung to another extreme after the real estate bubble that started in the late 1980s and burst in the mid-1990s. The natural vacancy rate for each township can be obtained from the estimation results. The average rate for 2000 was 0.11 to 0.12, compared to an actual vacancy rate of 0.158, which implied that 75% of townships had an excess supply of housing. Only Taipei City, Kaohsiung City and townships in areas inhabited by Taiwan’s indigenous peoples had, on average, a relatively low excess supply rate.

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    Bibliographic Info

    Article provided by Asian Real Estate Society in its journal International Real Estate Review.

    Volume (Year): 10 (2007)
    Issue (Month): 1 ()
    Pages: 119-150

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    Handle: RePEc:ire:issued:v:10:n:01:2007:p:119-150

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    Postal: Asia Real Estate Society, 51 Monroe Street, Plaza E-6, Rockville, MD 20850, USA
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    Web page: http://www.asres.org/

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    Postal: Asian Real Estate Society, 51 Monroe Street, Plaza E-6, Rockville, MD 20850, USA
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    Web: http://www.asres.org/

    Related research

    Keywords: housing vacancy rate; housing price; natural vacancy rate; Population and Housing Census; Taiwan;

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    References

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    1. Lundborg, Per & Skedinger, Per, 1999. "Transaction Taxes in a Search Model of the Housing Market," Journal of Urban Economics, Elsevier, vol. 45(2), pages 385-399, March.
    2. Wheaton, William C, 1990. "Vacancy, Search, and Prices in a Housing Market Matching Model," Journal of Political Economy, University of Chicago Press, vol. 98(6), pages 1270-92, December.
    3. Baffoe-Bonnie, John, 1998. "The Dynamic Impact of Macroeconomic Aggregates on Housing Prices and Stock of Houses: A National and Regional Analysis," The Journal of Real Estate Finance and Economics, Springer, vol. 17(2), pages 179-97, September.
    4. Read, Colin, 1997. "Vacancies and Rent Dispersion in a Stochastic Search Model with Generalized Tenant Demand," The Journal of Real Estate Finance and Economics, Springer, vol. 15(3), pages 223-37, November.
    5. Kan, Kamhon, 2003. "Residential mobility and job changes under uncertainty," Journal of Urban Economics, Elsevier, vol. 54(3), pages 566-586, November.
    6. Richard Voith & Theodore Crone, 1988. "National Vacancy Rates and the Persistence of Shocks in U.S. Office Markets," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 16(4), pages 437-458.
    7. Gabriel, Stuart A. & Nothaft, Frank E., 2001. "Rental Housing Markets, the Incidence and Duration of Vacancy, and the Natural Vacancy Rate," Journal of Urban Economics, Elsevier, vol. 49(1), pages 121-149, January.
    8. Kan, Kamhon, 1999. "Expected and Unexpected Residential Mobility," Journal of Urban Economics, Elsevier, vol. 45(1), pages 72-96, January.
    9. Stephen Malpezzi & Susan M. Wachter, . "The Role of Speculation in Real Estate Cycles," Zell/Lurie Center Working Papers 401, Wharton School Samuel Zell and Robert Lurie Real Estate Center, University of Pennsylvania.
    10. Krainer, John, 2001. "A Theory of Liquidity in Residential Real Estate Markets," Journal of Urban Economics, Elsevier, vol. 49(1), pages 32-53, January.
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