Editorial: IJHMA 17.5 editorial

Citation

Reed, R. (2024), "Editorial: IJHMA 17.5 editorial", International Journal of Housing Markets and Analysis, Vol. 17 No. 5, pp. 1125-1128. https://doi.org/10.1108/IJHMA-09-2024-189

Welcome to the fifth issue in the 17th volume of the International Journal of Housing Markets and Analysis. Being editor for this publication since the very first issue it has been evident that the scope and depth of research into housing markets has continued to evolve in this journal to a higher standard. This issue supports this view. Housing is consistently taking the centre stage in global economic discussions and is proudly viewed as the largest capital global investment in the property market. Other critical issues of high relevance continue to include housing affordability and tenure options. These 10 research papers have been double blind refereed to ensure the highest quality and effective contribution to knowledge. This journal encourages the publication of research which is new and innovative as well was though provoking and pushing research boundaries. This issue highlights the inclusion of both developed and developing countries as well as diverse research methodologies.

The first paper from Malaysia uses a lifetime income measure to evaluate the long-run housing affordability for four housing types across geographic locations and income distributions. The methodology is based on calculating a long-run housing affordability index (HAI) using data on house prices and household incomes. A ratio of predicted lifetime incomes to house prices, the HAI, is computed for four common housing types in six states. The HAI is also compared across four income percentiles. The findings identify varying patterns of housing affordability between different states. Notably the level of housing affordability has declined since 2010 with most housing types being unaffordable for millennial-led households associated with the lowest income. Housing is most affordable for those in the highest income bracket although there were also pockets of unaffordable housing observed.

The second paper from Australia acknowledges that house price fluctuations send vital signals to many parts of the economy where long-term predictions of house prices are of great interest to stakeholders including governments and property developers. Although predictive models based on economic fundamentals are widely used, the common requirement for such studies is that underlying data are stationary. This paper demonstrates the usefulness of alternative filtering methods for forecasting house prices. The methodology is based on exponential smoothing with trend adjustment and multiplicative decomposition using median house prices. The model performance is evaluated using out-of-sample forecasting techniques. The findings confirm that multiplicative decomposition outperforms exponential smoothing in relation to forecasting accuracy. The superior decomposition model suggests that seasonal and cyclical components provide important additional information for predicting house prices. Overall, the paper demonstrated that filtering models are simple (univariate models that only require historical house prices), easy to implement (with no condition of stationarity) and also are used widely in financial trading, sports betting and other fields where producing accurate forecasts is more important than explaining the drivers of change.

The third paper from Mauritius is based on the premise that the residential real estate sector has received an increase in foreign investment over past decades. This study investigates if the increasing level of foreign real estate investments (FREI) has increased land demand and land prices. The study also aims to depict whether the relation between FREI and land prices prevails at an aggregate and/or a regional level. The methodology examines data from 26 regions (based on the classifications of urban, rural or coastal) and analysed via a dynamic panel regression framework, namely, an autoregressive distributed lag (ARDL) model to take into account the dynamic nature of land price modelling. The outcomes show that, at the aggregate level, FREI do not have a significant influence on land prices in the long term; however, in the short-term a positive significant relationship is noted between the two variables. A regional breakdown of the data into urban, rural and coastal was undertaken. In the long term a positive significant link was only observed in the coastal regions; however, in urban and rural regions FREI did not influence land prices. In the short term the positive link subsists in the coastal regions, although in rural regions land prices are also positively affected by FREI.

The fourth paper from Mexico analyses to what extent the magnitude and visibility of criminal violence impacted the housing market in Mexico City. Between 2006 and 2012 it is noted that Mexico implemented a “frontal war against organised crime” where arguably this strategy increased criminal violence and triggered negative consequences across the country's economic, political and social spheres. The methodology used different violent proxies to measure the effect of the magnitude and visibility of violence in housing prices. The structure of the data set is an unbalanced panel with no conditions of strict exogeneity. To address endogeneity the first differences were calculated to estimate an Arellano-Bond estimator and then used the lags of the dependent variable to instrumentalise the endogenous variable. The results indicate that the magnitude of violence negatively impacts housing prices. Similarly, housing prices are negatively affected based on the closer the property is to visible violence, measured through narcomessages placed next to the bodies of executed victims. Furthermore, housing prices are not always affected when a violent event occurs nearby, such as when neighbours or potential buyers consider this event as sporadic violence.

The fifth paper from Dubai acknowledges that monetary policy is an important driver of the real estate sector’s performance. The recent wave of monetary tightening in response to the cost-of-living crisis has been associated with the decline in housing prices across the globe. This paper uses recent data to evaluate the impact of the US monetary policy on the housing market performance in the dollar-pegged countries using Dubai as a case study. The methodology collected unique longitudinal data on the volume of the monthly transactions of the residential properties and conducted a panel data analysis using within variation models. The changes in the interest rate policy in the US are determined by the domestic inflation in the US, therefore representing an exogenous change in the UAE. The results are robust to different specifications and suggest a strong negative correlation between the interest rate in the US and the housing sector demand in Dubai.

The sixth paper constructs a database of existing academic information about House Purchase Decisions (HPD) using a systematic literature review (SLR) to facilitate worldwide advancement of research under HPD domain. This research examined papers from two reputable databases, namely, “Scopus” and “Google Scholar” from 1992 to 2022 using a scoping review technique (Arksey and O'Malley, 2005) and a theme analysis method. Data from 181 articles was evaluated to create a thematic map of HPD research. Five main themes and their sub-themes were identified, namely, consumer behaviour, housing attributes, factors influencing purchasing decisions, investment analysis and also demographics which proved essential in understanding HPD and customer preferences for house purchase. This SLR provided important new insights relating to consumer concerns about home purchases in the rapidly developing residential real estate market and the issues that stakeholders should prioritise.

The seventh paper from Belgium has two primary objectives. First, it adds to the current literature on price premiums which is especially important for the under investigated rental market. Second, it highlights the benefits of renovation in both the sales and rental markets. The methodology tests a hedonic price model on 177,670 real estate listings between 2016 and 2021 to evaluate the relationship between the price of a good and its main characteristics. The equation is estimated via using ordinary least squares (OLS) and runs the model on residences for sale and for rent separately. Since the database is sufficiently large it is possible to split into a Training Group and a Test Group. The main purpose of using these two groups is to evaluate the outcome of the analysis. The findings confirm that energy efficient properties generate a price premium, however, that this premium is significantly larger in the sales market than in the rental market. In addition it was observed that both investors and landlords could benefit strongly from renovating a dwelling, especially when renovating from an F-label to an A-label designation.

The eighth paper from China investigates the effectiveness of decentralised control. This follows the decision in 2016 by the central government to decentralise the power of housing market control to the municipal level. The methodology initially identifies the key determinants of local housing prices in China. Taking into consideration the fundamental factors driving housing prices, it then investigates the effectiveness of decentralised housing price control by a pre- and post-policy comparison test using a panel data set of 35 major cities over the time period. The findings confirm that different policy effects on housing price growth among cities was observed with a one-year lag in effectiveness. Under the decentralised price control policy, cities with rapid price growth are incentivised to tighten price control; however, cities with relatively low housing prices and slow price growth are more likely to do nothing or decontrol the markets. This confirms that a shift from a centralised housing price control to a decentralised one is more appropriate and effective for the major cities.

The ninth paper from China investigates the level of housing affordability for urban residents in Northwest China. In addition it seeks to understand the consistency and influencing factors of various indicators on the evaluation of housing affordability. The selected geographical area is in contrast to previous studies on housing affordability which were concentrated in China’s coastal and central regions. The methodology analysed multi-year data on house sales, residents’ incomes and living expenses from 2011 to 2022. House price-to-income ratio (PIR), housing affordability index (HAI) and residual income approach (RIA) were calculated based on these data and then used as the measure of housing affordability. The findings confirm there are obvious differences in the level of housing affordability among the Xi'an, Lanzhou and Yinchuan where the housing affordability of residents in cities with small population and economic scale is better. The ability of most urban residents to afford suitable housing is still poor; however, the ability to afford small-sized housing is better. Most families with below-middle income have poor housing affordability. It is also observed that although various indicators had similarities in the evaluation of residents' housing affordability, the comprehensive evaluation results of multiple indicators were more reliable.

The tenth and final paper from Indonesia has two objectives, being:

1. analysing the level of conformity between the General Guidelines for the Governance of the Indonesian Sharia Entities (GGG-ISE) and the implementation in the field; and

2. proposing a model of corporate governance for Islamic property developers.

This research used a qualitative method based on a case study approach. The methodology adopted a structured interview method and relied upon a purposive technique in determining interviewees. The findings showed that the companies have implemented several principles of GGG-ISE, namely, Ethical and Responsible Actors, Risk Management, Internal Control, Compliance, Disclosure and Transparency, by making financial reports, Shareholder Rights and Stakeholder Rights both internal and external stakeholders. Based on these findings the study proposes a governance model for Islamic property developer companies referred to as the “General Guidelines for Governance of Islamic Property Developer Entity” (GGG-IPDE).

All prospective authors are welcome to contact the editor prior to submission to ensure their paper is in an acceptable format for publication. This includes ensuring the submitted paper conforms to the author guidelines for the journal which can reduce the time the paper spends in the review process. Please contact the editor directly if I can be of assistance prior to submission and/or discuss the procedure for admission into the review process. If you are interested in submitting a research paper or reviewing potential publications, please contact the editor direct at ijhma@ijhma.com.