Estimating Liquidity Effects in the Housing Market
نویسندگان
چکیده
Where trade is decentralized and information is imperfect, an urban housing market should be organized into separate market segments. Units in more active market segments should sell at a premium if households value asset liquidity. Evidence from the Hong Kong housing market strongly supports the joint hypothesis of market segmentation and transaction-based liquidity effects in the housing market in the cross-section. Units in housing developments with a greater turnover rate sell at a substantial premium. On average, 9.2% of the percentage difference in the prices of two given housing units in our sample can be attributed to liquidity effects. Contrary to conventional wisdom, the size of the housing development is not in general positively related to the rate of turnover and thus asset liquidity, while a less obvious candidate factor – the quality of the housing units seems to matter.
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