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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.
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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

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Type
Articles
Information
Macroeconomic Dynamics , Volume 19 , Issue 8 , December 2015 , pp. 1659 - 1714
Copyright
Copyright © Cambridge University Press 2015 

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