Marketing Time and Pricing Strategies by

This study examines the relationship between above-market price (or overpricing), along with various housing attributes, and time on the market (TOM). The study covers nearly 4,000 transactions of marketed domestic units of different living tenures, flat sizes, price ranges, and other physical characteristics in the Hong Kong residential property market. The results show that factors such as the aboveunemployment rate have significant impacts on TOM. Nonetheless, the aforesaid only is applicable to the sub-period investigations. It should be noted that their respective impacts adjust overtime. Specifically, the effectiveness of overpricing as a pricing strategy depends on the economic situation by the time in when a property is transacted, as well as the supply/availability of other alternatives on the housing market. When either housing supply on the market is limited due to mounting negative equities, searching cost for properties were larger to the point where it is easier for sellers to make profits from a higher listing price. Also, when expectations of even higher property prices in the future have been formed, buyers may take an offer although the list price is higher than the expected sale price. Both scenarios result in quicker transactions or lower TOMs. However, higher TOMs arise when the negative equity situations are improved. It indicates lower searching cost for the buyers to obtain information for better bargains and higher sensitivities towards overpricing strategies deployed by the sellers.