Please use this identifier to cite or link to this item: https://doi.org/10.1086/698747
Title: Property Rights Restrictions and Housing Prices
Authors: Lee, Kwan Ok 
Ooi, Joseph TL 
Keywords: Social Sciences
Economics
Law
Business & Economics
Government & Law
NEIGHBORHOOD QUALITY
LAND AUCTIONS
VALUES
COVENANTS
IMPACT
MARKET
MODEL
SALES
Issue Date: 1-May-2018
Publisher: UNIV CHICAGO PRESS
Citation: Lee, Kwan Ok, Ooi, Joseph TL (2018-05-01). Property Rights Restrictions and Housing Prices. JOURNAL OF LAW & ECONOMICS 61 (2) : 335-360. ScholarBank@NUS Repository. https://doi.org/10.1086/698747
Abstract: Using a natural experiment in Singapore, we examine the economic impact of temporarily restricting owners’ rights to transfer their property. Executive condominiums (ECs), introduced to provide affordable housing for middle-class citizens, are subject to restrictions on transferability in the first 10 years, unlike private condominiums (PCs). As per the option theory, EC buyers have the forward-start American put option with the right to sell their properties only after the contract date. Among transacted units matched by location, completion and transaction dates, and complex-and unit-level characteristics, we find that prices of new ECs are about 21 percent lower than those of PCs. After the 10th year, when property rights restrictions are completely removed, the price gap between ECs and PCs narrows to about 3 percent. These results suggest that property rights restrictions and illiquidity generated by the forward-start American put option for 10 years results in an 18 percent discount.
Source Title: JOURNAL OF LAW & ECONOMICS
URI: https://scholarbank.nus.edu.sg/handle/10635/234219
ISSN: 0022-2186
1537-5285
DOI: 10.1086/698747
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