Price dynamics and turnovers: Evidence from Singapore condominium market

Abstract

Turnovers of existing homes dominate housing transactions in housing market, which generates some research on turnover pattern. But the direct study of the effect of price dynamics on turnover probability of housing units is limited. This research conducts a duration analysis against a transaction database in Singapore condominium market to estimate turnover probability. 2PSTAR model with Heckman Procedure are used to estimate housing prices. The estimated results indicate that price appreciation has positive effect on turnover probability, while the effect of price depreciation is negative. The effect is asymmetric and rises with the magnitude of housing price changes. Turnover probability varies across housing submarkets. The empirical findings provide micro evidence to explain the positive price-volume relationship in housing market and can be explained by the theories proposed in the previous mobility and time-on-market studies.