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Turnovers and Housing Price Dynamics: Evidence from Singapore Condominium Market

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Abstract

Recent real estate literature has not only proposed a few theories to explain the puzzling macro feature of the positive correlation between price and transaction volume, but also attempted to identify the causal relationships between them. However, there is little empirical evidence to explicitly illustrate how housing price dynamics measured by both past price changes and price volatility at housing unit level affect housing turnovers. Using a unique housing transaction database from Singapore condominium market, this paper reveals an interesting housing turnover pattern in response to past housing price dynamics. The results illustrate that the rise and fall of a dwelling’s price can significantly affect housing turnovers in the same direction. Higher volatility reduces housing turnovers. The effects are stronger in the domain of losses and are weakening as the cumulative housing equity rises, implying that a seller withholds the sale in the downswing of a real estate cycle in the hope that the market will rebound. The findings offer some additional micro empirical evidence to the interactions between housing price and transaction volume and imply upwardly biased repeat sales indexes.

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Notes

  1. \({\text{PRICE\_EQUITY}}\left( {s{}_{0,}v,t} \right) = \frac{{PI_{t - 1} \left( {s_0 } \right) - PI_{t - v + 1} \left( {s_0 } \right)}}{{PI_{t - v + 1} \left( {s_0 } \right)}}\), where, v is the holding period (quarter). PI is the index number at location s0, t is the sale’s or censored date.

  2. In our study, we have tried from a set of 10 dummy variables (each represents a larger range of price growth) to a set of 40 dummy variables (each represents a smaller range of price growth). The empirical results are consistent. And the results from a set of 19 variables are chosen to report.

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Acknowledgement

We thank the support from the academic research fund (AcRF) in National University of Singapore. We thank Dr Wee Yong Yeo and an anonymous referee for their constrictive comments and suggestions.

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Authors and Affiliations

  1. Department of Real Estate, School of Design and Environment, National University of Singapore, Singapore, 119260, Singapore

    Yong Tu, Seow Eng Ong & Ying Hua Han

Authors
  1. Yong Tu
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  2. Seow Eng Ong
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  3. Ying Hua Han
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Correspondence to Yong Tu.

Appendix

Appendix

Table 4 Definition of variables
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Table 5 Descriptive statistics-1
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Table 6 Descriptive analysis-2
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Table 7 Empirical models 3 and 4
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Table 8 Empirical models 5 & 6
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Tu, Y., Ong, S.E. & Han, Y.H. Turnovers and Housing Price Dynamics: Evidence from Singapore Condominium Market. J Real Estate Finance Econ 38, 254–274 (2009). https://doi.org/10.1007/s11146-008-9155-x

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