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The Price-Volume Relationships between the Existing and the Pre-Sales Housing Markets in Taiwan

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Abstract

In Taiwan, the housing market can be separated into the existing housing market and the pre-sales market. The existing market can be regarded as the stock market, and the pre-sales market the flow market. However, some unique characteristics exist in the Taiwan market. Based on these characteristics, we modified the conventional housing stock-flow model to describe the price-volume relationship between the existing and pre-sales markets. Empirical models are constructed to test the relationship. Major findings are: 1) both the pre-sales price and the existing price converge to the long-run equilibrium; however, the pre-sales price adjusts faster than the existing price, implying that the existence of the pre-sales system improves market efficiency; and 2) housing supply from the pre-sales market responds to the housing market surpluses/shortages.

Suggested Citation

  • Ching-Chun Hua & Chin-Oh Chang & Chengho Hsieh, 2001. "The Price-Volume Relationships between the Existing and the Pre-Sales Housing Markets in Taiwan," International Real Estate Review, Asian Real Estate Society, vol. 4(1), pages 80-94.
  • Handle: RePEc:ire:issued:v:04:n:01:2001:p:80-94
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    Keywords

    Stock-flow Model; Pre-sales system; Housing Market;

    JEL classification:

    • L85 - Industrial Organization - - Industry Studies: Services - - - Real Estate Services

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