Forward pricing and the housing market: The pre‐sales housing system in Taiwan

Summary In countries that have experienced rapid economic development the need to establish more efficient markets in which private property can be constructed has induced some innovative solutions. One such solution is the phenomenon of a pre‐sales market that can be observed in Taiwan, Korea and more recently in China. Developers sell their property before building is started to acquire financing for the development companies. This paper discusses the process and, by recognizing the analogy between the pre‐sales market and forward markets, analyses the implications for developers.