Initial Property Offering : Underpricing and Learning in the Presale Housing Market

Utilizing a transaction-level dataset of presale private properties in Singapore over 20 years, this paper investigates the property price dynamics since the project launch. We show that for a newly launched residential project, its presale prices increase by approximately 1% every 100 days since the launch date, indicating an IPO underpricing-like price pattern. By matching transaction data with developer information, we demonstrate that developers tend to underprice their first two presale projects, and they can adjust pricing strategies in subsequent projects by learning from experience and adjacent peers. Our study discloses developers’ underpricing and learning behavior in the presale housing market