EXECUTIVE  EDITORS    K. W. Chau   Ko Wang  
EDITORS    Chin-Oh Chang  Zhenming Ge  Tyler T. Yang


Volume 3, Number 1, Winter 2000


Financial Development, Real Estate Development and Economic Development

Sheridan Titman

Graduate School of Businese, Finance Department, The University of Texas at Austin, Austin, Texas 78712-1179 or titman@mail.utexas.ed



The Relationship between Housing Price, Tenure Choice and Saving Behavior in Taiwan

Li-Min Hsueh

Chung-Hua Institution for Economic Research, 75 Chang-Hsing St., Taipei, Taiwan 106 or 


The purpose of this research is to empirically test whether house price increases are an important factor in a household's saving decisions and whether housing tenure choice and saving behavior are inter-correlated in Taiwan.

Heckman's two-stage procedure for correcting sample bias in used in the estimation of saving function for homeowners and renters. Household survey data from 1985, 1989 and 1993 are used to compare households' saving behavior at different times.

The empirical results show that in some cases the coefficients of the two different definitions of house price increases have opposite signs. These differences may be the result of different behavior motives. House price increases with respect to the price of the house itself seem to cause concern among households about future housing prices; hence, increase their savings ratio. House price increases with respect to income, however, seem to cause a wealth effect and then decreased savings ratio. Considering the complexity of households' reaction, the overall effect of house price changes on the aggregate savings ratio becomes impossible to determine.


Housing Price, Tenure Choice, Household Saving Behavior, Hedonic Price Method, Sample Selection Bias.



Spatial Autocorrelation in a Retail Context

Charles C. Carter

National Transportation Center, Morgan State University, 1700 E, Cold Sping Lane, Baltimore, MD 21251, USA or

William J. Haloupek

Lockheed Martin Corporation, Moorestown, New Jersey, USA


This paper describes and applies the weighted least squares (WLS) technique that corrects for spatial autocorrelation in the residuals of hedonic regression. Most empirical studies to date have focused on spatial autocorrelation in the housing market, i.e., single family home valuation. This study focuses on mall stores within shopping centers, with an emphasis on retail site selection within the mall.


Spatial autocorrelation, hedonic modeling, big rent, retail renta



Housing Affordability and Upward Mobility from Public to Private Housing in Singapore

Seow Eng Ong

Center for Real Estate Studies, Department of Real Estate, National University of Singapore, Singapore or


This paper examines the ability of buyers to afford and upgrade to private housing using the experience in land scarce Singapore as a case study. The concepts of the "threshold buyer" and "threshold upgrader" are introduced to construct an operational inter-temporal model of affordability and upward mobility, taking into consideration income, mortgage rates, prices of public housing flats and the legislative/financing framework in Singapore. The theoretical  private property price computed by the upward mobility model is the lower bound dictated by affordability and cash outlay considerations such that buyer/upgrader is no better or worse off arising from changes in the relevant factors over time. The model in empirically tested to evaluate the theoretical underpinning as well as the ability of the model to predict private property price. Finally, the paper examines the implications for housing ownership policy in a wider context.


Housing,  affordability, upgrade, property price, mortgage rate, income.



Housing Demand in Tokyo

Piyush Tiwari

Institute of Policy and Planning Sciences, University of Tsukuba 305 8573 Japan  or


Housing policy formulation should be informed by a careful understanding of the behavior of the housing market, as reflected by housing demand. Such basic information is important, not only for improved project design but also for the development of better sector-wide policies. Housing is a complex outcome of cultural, economic and regulatory environment. Consistent estimates of price and income elasticity housing demand are prerequisites for effective policy design. Results, from earlier studies on Japanese housing markets, are inconclusive and the estimates of price and income elasticity of housing demand vary over a wide range. It may be argued that measuring the volume of housing services as housing expenditure, as is done in previous research, essentially ignores the heterogeneity, and for large number of policy purposes like impact of tax on tenure choice, choice between owning and renting etc., the distribution of housing consumption into qualitatively different categories is of more interest than an aggregate qualitative measure of housing expenditure alone. This paper analyzes the demand for housing in Tokyo using a discrete choice model. Three structure type (as type of unit) determine demand for housing which are modeled simultaneously. The income elasticity of market share of ownership house in positive and ranges between 0.16 to 0.34. However, income own price elasticties vary over large range from -0.03 to -5.1 with smaller in magnitude for ownership houses and larger for rental houses.


Housing demand, Discrete choice model; Nested Multinomial Logit Model.



Over-Confidence and Cycles in Real Estate Markets: Cases in Hong Kong and Asia

Ko Wang

Faculty of Business Administration, The Chinese University of Hong Kong or, and Department of Finance, California State University-Fullerton 

Yuqing Zhou

Department of Finance, The Chinese University of Hong Kong or

Su Han Chan

Faculty of Business, The University of Hong Kong or, and Department of Finance, California State University - Fullerton

K. W. Chau

Department of Real Estate and Construction, The University of Hong Kong or


Studies on the calibration of subjective probabilities find that people tend to over-estimate the precision of their knowledge. In this paper we develop a semi-rational model and apply it to the real estate markets in Hong Kong and other Asian countries. The key point is that a person is rational about her/his private information until her/his private information is confirmed by a clearly defined market signal. Using a pre-sale as a mechanism of updating a overbuilding and cycles in real estate markets. Our finding indicates that a pre-sale activity will increase the magnitude of over-building and over-confidence to the well-established literature dealing with the issue of over-capacity in many industrial sectors.


Market signal, over capacity, pre-sale, real estate cycle, semi-ration model.



Life Cycle, Mortgage Payment, and Forced Savings

Chu-Chia Lin

Department of Economics, National Chengchi University, Taipei, Taiwan, or

Chien-Liang Chen

Department of Economics, National Chengchi University, Taipei, Taiwan, or

Sue-Jing Lin

Department of International Trade, Lung-Hwa Institute of Technology, Taoyuan, Taiwan, or


A common puzzling phenomenon over the household survey of Taiwan is that the renters' saving rate is higher than that of the owners', while the latter has a higher average income than the former. One reason for this feature is that certain housing owners have to pay a greater amount of mortgage decision is correlated with the household's life cycle, in addition to income. And therefore, when one tries to estimate the correct saving rate, he or she has to consider the household's life cycle as well.

In this study, we apply a date set of the household survey of Taiwan to investigate the correlation of life cycle, mortgage payment, and forced savings. First of all, we estimate the saving rate in a traditional way, and then estimate the saving rate after the adjustment of mortgage payment. To figure out the correct saving rate with the tenure decision, we evaluate different households' saving behaviors according cohorts, and consequently, we could check how life cycle plays its role in this model. And our finding is, that for every cohort, the forced savings is significant for owners with mortgage and for renters as well.


Life Cycle, Mortgage Payment, Forced Savings.



Make It Simple and Light: Some Thoughts on Real Estate Related Taxation in China

Anthony Yanxiang Gu

Jones School of Business, State University of New York, Seoul, 115D South Hall, 1 College Circle, Geneseo, NY 14454, USA or

Joseph W. Trefzger

Department of Finance, Insurance and Law, Illinois State University, Normal, IL 61790-5480 or


This article discusses the advantages and disadvantages of real estate-related taxes that might be imposed in mainland China, in light of the government's needs for tax revenue and the economy's need for incentives to develop land. Some policy recommendations are presented, based on an analysis of real estate taxation in general and of China's specific needs. As one recent article has noted, understanding how behavior adjusts in response to taxation is one of the most important issues in public finance.


China, Public Finance, Real Estate Taxation.





To    Volume 1, Number 1, Spring 1998

To    Volume 2, Number 1, Winter 1999