Hostname: page-component-8448b6f56d-sxzjt Total loading time: 0 Render date: 2024-04-19T22:59:58.163Z Has data issue: false hasContentIssue false
  • English
  • Français

RESIDENTIAL PROPERTY PRICE INDICES FOR TOKYO

Published online by Cambridge University Press:  21 April 2015

Erwin Diewert  and
Chihiro Shimizu
Erwin Diewert*
Affiliation:
University of British Columbia and University of New South Wales
Chihiro Shimizu
Affiliation:
Reitaku University and University of British Columbia
*
Address correspondence to: Erwin Diewert, School of Economics, University of British Columbia, Vancouver, B.C., CanadaV6T 1Z1 and the School of Economics, University of New South Wales, Sydney, Australia; e-mail: erwin.diewert@ubc.ca.
Get access Rights & Permissions [Opens in a new window]

Abstract

This paper uses hedonic regression techniques to decompose the price of a house into land and structure components using real estate sales data for Tokyo. To get sensible results, a nonlinear regression model using data that covered multiple time periods was used. Collinearity between the amounts of land and structure in each residential property leads to inaccurate estimates for the land and structure value of a property. This collinearity problem was solved by using exogenous information on the rate of growth of construction costs in Tokyo in order to get useful constant-quality subindices for the price of land and structures separately.

Keywords

House Price IndexesLand and Structure ComponentsTime Dummy Hedonic RegressionsSpline FunctionsFlexible Functional FormsFisher Ideal Indexes
Type
Articles
Information
Macroeconomic Dynamics , Volume 19 , Issue 8 , December 2015 , pp. 1659 - 1714
Copyright
Copyright © Cambridge University Press 2015 

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

References

REFERENCES

Bostic, R.W., Longhofer, S.D., and Readfearn, C.L. (2007) Land leverage: Decomposing home price dynamics. Real Estate Economics 35 (2), 183–208.CrossRefGoogle Scholar
Clapp, J.M. (1980) The elasticity of substitution for land: The effects of measurement errors. Journal of Urban Economics 8, 255–263.CrossRefGoogle Scholar
Court, A.T. (1939) Hedonic price indexes with automotive examples. In The Dynamics of Automobile Demand, pp. 98–117. New York: General Motors Corporation.Google Scholar
Davis, M.A. and Heathcote, J. (2007) The price and quantity of residential land in the United States. Journal of Monetary Economics 54, 2595–2620.CrossRefGoogle Scholar
de Haan, J. (2003) Time Dummy Approaches to Hedonic Price Measurement. Paper presented at the Seventh Meeting of the International Working Group on Price Indices (Ottawa Group), May 27–29, 2003, INSEE, Paris.CrossRefGoogle Scholar
de Haan, J. (2008) Hedonic Price Indexes: A Comparison of Imputation, Time Dummy and Other Approaches. Centre for Applied Economic Research working paper 2008/01, Faculty of Economics and Commerce, University of New South Wales, Sydney, Australia.Google Scholar
de Haan, J. (2009) Comment on hedonic imputation versus time dummy hedonic indexes. In Diewert, W.E., Greenlees, J.S. and Hulten, C.R. (eds.), Price Index Concepts and Measurement, Studies in Income and Wealth 70, pp. 196–200. Chicago: University of Chicago Press.Google Scholar
de Haan, J. and Diewert, W.E. (eds.) (2011) Handbook on Residential Property Price Indexes, Luxembourg: Eurostat. Available at http://epp.eurostat.ec.europa.eu/portal/page/portal/hicp/methodology/hps/rppi_handbook.Google Scholar
de Haan, J. and Krsinich, F. (2012) Scanner Data and the Treatment of Quality Change in Rolling Year GEKS Price Indexes. Paper presented at the EMG Workshop 2012, November 23, 2012, Australian School of Business, University of New South Wales, Crowne Plaza Hotel, Coogee Beach, Sydney.Google Scholar
de Haan, J. and van der Grient, H. (2011) Eliminating chain drift in price indexes based on scanner data. Journal of Econometrics 161, 36–46.CrossRefGoogle Scholar
Diewert, W.E. (1976) Exact and superlative index numbers. Journal of Econometrics 4, 114–145.CrossRefGoogle Scholar
Diewert, W.E. (1992) Fisher ideal output, input and productivity indexes revisited. Journal of Productivity Analysis 3, 211–248.CrossRefGoogle Scholar
Diewert, W.E. (2003a) Hedonic regressions: A consumer theory approach. In Feenstra, R.C. and Shapiro, M.D. (eds.), Scanner Data and Price Indexes, Studies in Income and Wealth 64. pp. 317–348. Chicago: University of Chicago.CrossRefGoogle Scholar
Diewert, W.E. (2003b) Hedonic Regressions: A Review of Some Unresolved Issues. Paper presented at the 7th Meeting of the Ottawa Group, Paris, May 27–29.Google Scholar
Diewert, W.E. (2010) Alternative Approaches to Measuring House Price Inflation. Discussion paper 10-10, Department of Economics, University of British Columbia, Vancouver.Google Scholar
Diewert, W.E. (2011) The Paris OECD-IMF workshop on real estate price indexes: Conclusions and future directions. In Diewert, W.E., Balk, B.M., Fixler, D., Fox, K.J. and Nakamura, A.O. (eds.), Price and Productivity Measurement, Vol. 1: Housing, pp. 87–116. Vancouver, BC, Canada: Trafford Press.Google Scholar
Diewert, W.E., de Haan, J., and Hendriks, R. (2011a) Hedonic Regressions and the Decomposition of a House Price Index into Land and Structure Components. Discussion paper 11-01, Department of Economics, University of British Columbia, Vancouver. Forthcoming in Econometric Reviews.Google Scholar
Diewert, W.E., de Haan, J., and Hendriks, R. (2011b) The decomposition of a house price index into land and structures components: A hedonic regression approach. Valuation Journal 6, 58–106.Google Scholar
Diewert, W.E., Heravi, S., and Silver, M. (2009) Hedonic imputation versus time dummy hedonic indexes. In Diewert, W.E., Greenlees, J.S., and Hulten, C.R. (eds.), Price Index Concepts and Measurement, Studies in Income and Wealth 70, pp. 161–196. Chicago: University of Chicago Press.CrossRefGoogle Scholar
Fisher, I. (1922) The Making of Index Numbers. Boston: Houghton-Mifflin.Google Scholar
Francke, M.K. (2008) The hierarchical trend model. In Kauko, T. and Damato, M. (eds.), Mass Appraisal Methods: An International Perspective for Property Valuers, pp. 164–180. Oxford, UK: Wiley-Blackwell.CrossRefGoogle Scholar
Francke, M.K. and Vos, G.A. (2004) The hierarchical trend model for property valuation and local price indices. Journal of Real Estate Finance and Economics 28 (2/3), 179–208.CrossRefGoogle Scholar
Gyourko, J. and Saiz, A. (2004) Reinvestment in the housing stock: The role of construction costs and the supply side. Journal of Urban Economics 55, 238–256.Google Scholar
Hicks, J.R. (1946) Value and Capital, 2nd ed.Oxford, UK: Clarendon Press.Google Scholar
Hill, P. (ed.) (2004) Consumer Price Index Manual: Theory and Practice. Geneva: International Labour Office.Google Scholar
Ivancic, L., Diewert, W.E., and Fox, K.J. (2011) Scanner data, time aggregation and the construction of price indexes. Journal of Econometrics 161, 24–35.CrossRefGoogle Scholar
Koev, E. and Santos Silva, J.M.C. (2008) Hedonic Methods for Decomposing House Price Indices into Land and Structure Components. Unpublished paper, Department of Economics, University of Essex, England.Google Scholar
Lowe, J. (1823) The Present State of England in Regard to Agriculture, Trade and Finance, 2nd ed.London: Longman, Hurst, Rees, Orme and Brown.Google Scholar
McMillen, D.P. (2003) The return of centralization to Chicago: Using repeat sales to identify changes in house price distance gradients. Regional Science and Urban Economics 33, 287–304.CrossRefGoogle Scholar
Muth, R.F. (1971) The derived demand for Urban residential land. Urban Studies 8, 243–254.CrossRefGoogle Scholar
Rambaldi, A.N., McAllister, R.R.J., Collins, K., and Fletcher, C.S. (2010) Separating Land from Structure in Property Prices: A Case Study from Brisbane Australia. School of Economics, University of Queensland, St. Lucia, Queensland, Australia.Google Scholar
Rosen, S. (1974) Hedonic prices and implicit markets: Product differentiation in pure competition. Journal of Political Economy 82, 34–55.CrossRefGoogle Scholar
Schwann, G.M. (1998) A real estate price index for thin markets. Journal of Real Estate Finance and Economics 16 (3), 269–287.CrossRefGoogle Scholar
Shimizu, C. and Nishimura, K.G. (2007) Pricing structure in Tokyo metropolitan land markets and its structural changes: Pre-bubble, bubble, and post-bubble reriods. Journal of Real Estate Finance and Economics 35 (4), 495–496.CrossRefGoogle Scholar
Shimizu, C., Nishimura, K.G., and Watanabe, T. (2010a) Housing prices in Tokyo: A comparison of hedonic and repeat sales measures. Journal of Economics and Statistics 230 (6), 792–813.Google Scholar
Shimizu, C., Nishimura, K.G., and Watanabe, T. (2012) House Prices from Magazines, Realtors, and the Land Registry. In Property Market and Financial Stability, BIS paper 64, pp. 29–38. Bank of International Settlements.Google Scholar
Shimizu, C., Takatsuji, H., Ono, H., and Nishimura, K.G. (2010b) Structural and temporal changes in the housing market and hedonic housing price indices. International Journal of Housing Markets and Analysis 3 (4), 351–368.CrossRefGoogle Scholar
Statistics Portugal (Instituto Nacional de Estatistica) (2009) Owner-Occupied Housing: Econometric Study and Model to Estimate Land Prices, Final Report. Paper presented to the Eurostat Working Group on the Harmonization of Consumer Price Indices, March 26–27, Luxembourg, Eurostat.Google Scholar
Thorsnes, P. (1997) Consistent estimates of the elasticity of substitution between land and non-land inputs in the production of housing. Journal of Urban Economics 42, 98–108.CrossRefGoogle Scholar
White, K.J. (2004) Shazam: User's Reference Manual, Version 10. Vancouver, Canada: Northwest Econometrics Ltd.Google Scholar