Subsidized Housing
From today's Appledaily.
Trust me, the pricing of the monthly rentals and/or the pricing of the "subsidized" housing is a good PhD dissertation topic.
However, everything is at a cost, and this topic is very challenging. There are at least three issues to address, and they are:-
1. there is an option to purchase. You have to price this option and include it in the monthly rental or charge it separately in a lump sum (though I guess the gov't is going to give it free of charge);
2. the underlying asset is not an investment asset, so CAPM and forward risk neutral approach can hardly be used; and
3. the total rentals paid (during the renting period) are future purchase price deductible.
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My apriori guess is that the selected purchasers/leasors are going to win an once-in-a-life-time jackpot!
Recommendation:
The qualified, go and prepare well for the lottery NOW!
Labels: Economics
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