MISPRICING AND TIME ON THE MARKET: EVIDENCE FROM SINGAPORE RESIDENTIAL MARKET

Abstract

Real estate developers and their agents seek to sell their development projects for as high a price and as quickly as possible. This study focuses on the Time-On-the-Market (TOM) of private non-landed residential housings in Singapore based on projects that were launched in the year 2003. The types of housings in the study consist namely of condominiums and apartments. The samples are then sub-divided into two categories: High and Low-priced housings for further investigations on the effects of TOM. A two-stage least square regression model is adopted in this study to eliminate the simultaneity problems when regressing TOM on the expected selling price. The impact of overpricing, brokerage firm related variables, developers' build-up capital and discounts given are tested. The results show that mispricing is an insignificant factor in TOM. This can be attributed to the publicly available transacted prices of properties, as well as well-informed pricing strategies adopted by developers, and hence, mispricing is not a severe problem in Singapore.