Developers land sale bidding strategy and house price expectation formation
Author/s: Char Leung
Date Published: 2/01/2019
Published in: Volume 25 - 2019 Issue 1 (pages 39 - 48)
Abstract
This paper studies developers’ bidding strategy in Hong Kong’s land sale market where aggressive bidding is commonly seen. Given that the difference between the submitted bid and the estimated land value can be explained by the developer’s housing market outlook, the formation of house price expectation represents a tool to understand developers’ bidding strategy. Different economic expectation models are tested. While the rational expectation hypothesis (REH) is rejected, the proposed adaptive implicit expectation model best describes developers’ expectations. The findings in this paper provide land policymakers with insights on controlling the outcome of land sales as well as fill the gap of the house price expectation formation which remains little known.Download Full Article
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Keywords
Bidding - Government Land Sales - Price Expectation - TenderReferences
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