Housing Price Differences Under the Development of New Towns: Using Taiwan as an Example

Abstract

Article History JEL Classification G11,R10, R23, R58The purpose of this study is to examine the housing price differences between new towns and old urban areas. In addition, related issues such as spread options, the anchoring effect, and the ripple effect are discussed. By investigating the static spread, dynamic spread, and new town theory, we test seven hypotheses and verify most of these hypotheses. Furthermore, the key causes of the spread are identified: For example, spread options for different residence types depend on risk attitudes; and the ripple effect and anchoring effect of neighboring areas are determined by regional compactness and market transparency. The findings and relevant factors addressed in study can serve as a reference for investment decision making as well as for governments to implement projects of new town development or old urban area revitalization.Contribution/ Originality: The paper's primary contribution is finding that the key factors cause housing prices differences between new towns and old urban areas. It can serve as a reference for investment decision making as well as for governments to implement projects of new town development or old urban area revitalization.