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Hong Kong Land for Hong Kong People$
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Yue Chim Richard Wong

Print publication date: 2015

Print ISBN-13: 9789888208654

Published to Hong Kong Scholarship Online: September 2015

DOI: 10.5790/hongkong/9789888208654.001.0001

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Speculators, Property Agents, and the Spreading of Risk in the Presale Housing Market

Speculators, Property Agents, and the Spreading of Risk in the Presale Housing Market

Chapter:
(p.137) 19 Speculators, Property Agents, and the Spreading of Risk in the Presale Housing Market
Source:
Hong Kong Land for Hong Kong People
Author(s):

Yue Chim Richard Wong

Publisher:
Hong Kong University Press
DOI:10.5790/hongkong/9789888208654.003.0019

Housing forward contracts for presale units have two important distinguishing features. First, residential units are necessarily heterogeneous. Second, the final users are typically homeowners or small landlords and usually not the speculators. Speculators and property agents who trade in housing forwards perform these dual functions and therefore offer an incentive for developers to sell some of their presale units to them rather than to final users. Developers are also motivated to sell some of their units to speculators and property agents because they can sell units in a single development in a number of stages. Clearly, the price one is willing to bid for a unit depends to a large extent on its expected future value. This value will change over time as more information becomes available, which will alter the likely bid. A developer could try to pick the best time to sell units but can never be completely certain when that will be. An optimal strategy would be to space out sales over time to balance risk against expected return, but there is a limit to such sales, dictated by relevant cost-benefit considerations.

Keywords:   Hong Kong, Housing, Housing policy, Public Housing, Politics, Social mobility, Population, Economics, Growth

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