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Housing Price Differences Under the Development of New Towns: Using Taiwan as an Example

Chin-Shyong Su, Tser-Yieth Chen and Hsueh-Ling Wu
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Chin-Shyong Su: Department of Finance, National Dong-Hwa University, Shoufeng, Hualien, Taiwan, R.O.C.
Tser-Yieth Chen: Graduate Institute of International Business, National Taipei University, San Shia District, New Taiwan City, Taiwan, R.O.C.
Hsueh-Ling Wu: Department of Finance and Cooperative Management, National Taipei University, San Shia District, New Taiwan City, Taiwan, R.O.C.

Asian Economic and Financial Review, 2017, vol. 7, issue 9, 869-881

Abstract: The purpose of this study is to examine the housing price differences between new towns and old urban areas. In addition, related issues such as spread options, the anchoring effect, and the ripple effect are discussed. By investigating the static spread, dynamic spread, and new town theory, we test seven hypotheses and verify most of these hypotheses. Furthermore, the key causes of the spread are identified: For example, spread options for different residence types depend on risk attitudes; and the ripple effect and anchoring effect of neighboring areas are determined by regional compactness and market transparency. The findings and relevant factors addressed in study can serve as a reference for investment decision making as well as for governments to implement projects of new town development or old urban area revitalization.

Keywords: New town; Spread optionm; Anchoring effect; Ripple effect; Discrepancy theory; Taiwan. (search for similar items in EconPapers)
Date: 2017
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