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

Ching-Chun Hua (), Chin-Oh Chang () and Chengho Hsieh ()
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Ching-Chun Hua: Department of Public Affairs Management, Hsuan Chuang University, Hsin-Chu, Taiwan, http://www.hcu.edu.tw/
Chin-Oh Chang: Department of Land Economics, National Chengchi University, Taipei, Taiwan, http://www.nccu.edu.tw/
Chengho Hsieh: Department of Economics and Finance, Louisiana State University in Shreveport, One University Place, Shreveport, Louisiana, 71115, USA, http://www.lsus.edu/

International Real Estate Review, 2001, vol. 4, issue 1, 80-94

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.

Keywords: Stock-flow Model; Pre-sales system; Housing Market (search for similar items in EconPapers)
JEL-codes: L85 (search for similar items in EconPapers)
Date: 2001
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