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1 – 10 of over 24000Chung Yim Edward Yiu and Ka Shing Cheung
The repeat sales house price index (HPI) has been widely used to measure house price movements on the assumption that the quality of properties does not change over time. This…
Abstract
Purpose
The repeat sales house price index (HPI) has been widely used to measure house price movements on the assumption that the quality of properties does not change over time. This study aims to develop a novel improvement-value adjusted repeat sales (IVARS) HPI to remedy the bias owing to the constant-quality assumption.
Design/methodology/approach
This study compares the performance of the IVARS model with the traditional hedonic price model and the repeat sales model by using half a million repeated sales pairs of housing transactions in the Auckland Region of New Zealand, and by a simulation approach.
Findings
The results demonstrate that using the information on improvement values from mass appraisal can significantly mitigate the time-varying attribute bias. Simulation analysis further reveals that if the improvement work done is not considered, the repeat sales HPI may be overestimated by 2.7% per annum. The more quality enhancement a property has, the more likely it is that the property will be resold.
Practical implications
This novel index may have the potential to enable the inclusion of home condition reporting in property value assessments prior to listing open market sales.
Originality/value
The novel IVARS index can help gauge house price movements with housing quality changes.
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Chris Leishman and Craig Watkins
This paper argues that the methods of constructing house price indices for UK markets lag behind those employed in Europe, Australasia and North America. This is particularly…
Abstract
This paper argues that the methods of constructing house price indices for UK markets lag behind those employed in Europe, Australasia and North America. This is particularly evident in terms of the range and level of technical sophistication of the index construction methodologies. Importantly, the paper argues that the absence of reliable house price indicators undermines the decision‐making ability of policy makers and investors operating in urban housing markets. The paper suggests that this can, in part, be remedied by the construction of a system of local house price indices for British cities. The empirical research presents the first UK application of the repeat sales method to UK data. Indices are constructed for four cities and a range of diagnostic tests are used to establish the reliability and accuracy of the indices as a means of monitoring house price change. The research concludes by suggesting that the methods used here should be tested further on data from major metropolitan regions in England and Wales.
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The purpose of this paper is to examine if temporal aggregation matters in the construction of house price indices and to test the accuracy of alternative index construction…
Abstract
Purpose
The purpose of this paper is to examine if temporal aggregation matters in the construction of house price indices and to test the accuracy of alternative index construction methods.
Design/methodology/approach
Five index construction models based on the hedonic, repeat‐sales and hybrid methods are examined. The accuracy of the alternative index construction methods are examined using the mean squared error and out‐of‐sample technique. Monthly, quarterly, semi‐yearly and yearly indices are constructed for each of the methods and six null hypotheses are tested to examine the temporal aggregation effect.
Findings
Overall, the hedonic is the best method to use. While running separate regressions to estimate the index is best at the broader level of time aggregation like the annual, pooling data together and including time dummies to estimate the index is the best at the lower level of time aggregation. The repeat‐sales method is the least preferred method. The results also show that it is important to limit time to the lowest level of temporal aggregation when construction property price indices.
Practical implications
This paper provides alternative method, the mean squared error method based on an out‐of‐sample technique to evaluate the accuracy of alternative index construction methods.
Originality/value
The introduction of financial products like the property derivatives and home equity insurances to the financial market calls for accurate and robust property price indices. However, the index method and level of temporal aggregation to use still remain unresolved in the index construction literature. This paper contributes to fill these gaps.
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N. Nuruzzaman and Deeksha Singh
This paper aims to attempt to examine the effect of firm-customer exchange characteristics, frequency and specificity, on the likelihood of the firm to generate customer-driven…
Abstract
Purpose
This paper aims to attempt to examine the effect of firm-customer exchange characteristics, frequency and specificity, on the likelihood of the firm to generate customer-driven innovation. The authors draw from social capital theory and argue that repetitive and customer-specific exchange improves the trusts between firm and customers, which in turn ease the flows of tacit knowledge from customers to the firm. From the perspective of customer knowledge management, the authors contribute by examining the mechanism by which a firm can acquire knowledge from and about customers. The authors further argue that a firm’s ability to absorb knowledge from customers and turn them into innovation also depends on its internal capability. A firm that consistently upgrades its capacity is more likely to generate customer-driven innovation than those that do not. Also, the authors argue that the joint effect of exchange characteristics and internal capability upgrading can further increase the likelihood of customer-driven innovation. Such a joint force implies the positive moderating effect of internal capability upgrading to the relationship between exchange characteristics and customer-driven innovation.
Design/methodology/approach
The authors test the hypotheses on 3,000 firms from six countries in Latin America. They take advantage of the 2017 World Bank Enterprises Survey. This most recent of the survey asks questions on various types of innovation and firm-customers exchange characteristics and other firm-level variables.
Findings
The authors find support for our hypotheses that repeated exchange and exchanges tailored to specific customers have a positive effect on customer-driven innovation. Also, they find the support that internal capability upgrading, in the form of investment in product design, marketing and organizational development has a positive effect on customer-driven innovation. The authors also find that investment in product design positively moderates the impact of exchange characteristics on the likelihood of customer-driven innovation.
Originality/value
While past studies focus on strategies to acquire and manage customers’ knowledge, little has been said about how exchange attributes can encourage or discourage innovation? This question is important because various theoretical perspectives may have a different prediction on the effect of firm-customer relationship and innovation. This study attempts to bridge such theoretical tension.
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Francesca Salvo, Marina Ciuna and Manuela De Ruggiero
A useful instrument to understand and examine the inner workings of the property trade is devising index numbers of property prices based on historical sequences of market prices…
Abstract
Purpose
A useful instrument to understand and examine the inner workings of the property trade is devising index numbers of property prices based on historical sequences of market prices. The present work aims at the definition of index numbers of property prices, proposing an innovative methodology compared with what usually recurs in literature. The purpose of this paper is to discuss these issues.
Design/methodology/approach
The analysis proposed, based on the mechanisms of formation of stock indices, investigates the analogies between stock and property information, according to the peculiarities of the property trade, leading to a methodology approach, derived from Simple Price Index Method, able to consider possible anomalies in the collected sample of purchase prices, using weighting coefficients based on reliability coefficients of sale prices of properties.
Findings
The novel approach proposed has led to the definition of a original methodology useful to appraise property price index numbers and other derived indicators, effective for interpreting and identifying real estate market dynamics in a given area of study, regarded as a standard estimating methodology applicable to any geographical context and kind of property.
Practical implications
Methodology proposed in this work is useful to revalue real estate sales price and to consider presence of anomalous sales price in property samples.
Originality/value
The calculation of index numbers of prices is usually based on Simple Price Index Methods. Literature shows large use of different methods, such as Repeat Sales Method, Hedonic Price Method, Repeat Value Model. The present work propose an innovative methodology able to detect the presence of possible anomalous market prices in the representative sample, using an appropriate vector of weights in order to take into account the level of reliability of market data.
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This paper reviews the contributions of Harry Tosdal, a pioneer of sales and marketing management. It serves to puncture a variety of marketing myths and illuminate a completely…
Abstract
Purpose
This paper reviews the contributions of Harry Tosdal, a pioneer of sales and marketing management. It serves to puncture a variety of marketing myths and illuminate a completely neglected concept of the consumer.
Design/methodology/approach
This account is based on a close reading of Tosdal’s publications.
Findings
Tosdal articulated a highly nuanced interpretation of marketing management, market research and sales force management. Each of these elements was keyed into fostering goodwill between firm and customer. Perhaps most importantly, he provides a counterpoint to the idea that the consumer is sovereign in the marketplace. Instead, he makes a case that the ontology of the market is riven by compromise.
Originality/value
This paper highlights the concept of the compromising consumer. Arguably, this is a much more empirically realistic conception of the agency we possess in the marketplace than the idea that we move markets in ways absolutely consistent with our desires.
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This paper examines commonly used property price indices in several Commonwealth countries. It finds that many of the measures may be flawed owing to two issues relating to the…
Abstract
This paper examines commonly used property price indices in several Commonwealth countries. It finds that many of the measures may be flawed owing to two issues relating to the index construction methodology: the quality change problem and the choice of an index number algorithm. Using data that comprises the universe of transactions for the Singapore residential market, alternative indices based on more rigourous estimation models are constructed that aim to mitigate these problems. When compared to the official benchmark indices, deviations in time series price behaviour are evident particularly for short‐run dynamics. A key implication of the results is the importance of explicitly recognizing the biases that can arise from using extant indices. Otherwise, a reliance on flawed index signals for decision‐making may result in distorted allocations.
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Anthony Owusu-Ansah and Raymond Talinbe Abdulai
The purpose of this paper is to test the accuracy of the explicit time variable (ETV) and the strictly cross-sectional (SCS) hedonic models when constructing house price indices…
Abstract
Purpose
The purpose of this paper is to test the accuracy of the explicit time variable (ETV) and the strictly cross-sectional (SCS) hedonic models when constructing house price indices in developing markets using Ghana as a case study.
Design/methodology/approach
The quantitative research methodology is adopted where the accuracy of the two hedonic models used in the construction of house price indices is examined using the mean squared error (MSE) and out-of-sample technique. Yearly indices are constructed for each of the models using 60 per cent of the sample data and 40 per cent is used to forecast house prices for each observations based on which the MSEs are calculated.
Findings
The two models produce similar house price trend but the SCS model is more volatile. The ETV model produces the lower MSE, suggesting that it is better to pool data together and includes time dummies (ETV) to estimate indices rather than running separate regressions (SCS) to estimate the index. Using the Morgan–Granger–Newbold test, it is found that indeed the difference between the forecast errors of the two models are statistically significant on a 1 per cent level confirming the accuracy of the ETV model over the SCS model.
Practical implications
This paper has produced convincing results recommending the use of the ETV hedonic model to construct house price indices which is of use to practitioners and academics.
Originality/value
The introduction of financial products like the property derivatives and home equity insurances to the financial market calls for accurate and robust property price indices and the hedonic method is mostly used to construct these indices. While there have been a lot of test conducted as to which variant of the hedonic method to use in developed markets, little is known about the developing markets. This paper contributes to fill these gaps.
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The purpose of this paper is to present the progress and trends of the literature on art as an investment and to outline potential research lines to be developed.
Abstract
Objective
The purpose of this paper is to present the progress and trends of the literature on art as an investment and to outline potential research lines to be developed.
Design/methodology/approach
This work gathers, analyses and critically discusses the attributes of investments in art in general, and in Latin American art in particular.
Findings
Most studies report that art (art in general, and Latin American in particular) has offered relatively low but positive real returns, which have tended to be below those offered by stocks and similar to those realized by bonds. Art has a low correlation with other investments.
Research limitations and implications
The literature on the attributes of Latin American art as an investment is limited and new research would help to close the knowledge gap with respect to this segment of the art market as it continues to grow.
Practical implications
Similarly to the research carried out into other segments of the art market, studies on Latin American art suggest that the works of art are worth more, ceteris paribus: the more renowned the artist, the larger the work, whether they were executed in oil, and if they were auctioned at Sotheby’s or Christie’s. The paper also details a series of practical implications for those who participate in the art market.
Originality/value
To the best of the authors’ knowledge, this is the first exhaustive review of the literature on the attributes of Latin American art as an investment. The findings of this study are useful for academics, art collectors, auction houses, gallerists and others who take part in the arts market.
Propósito
Presentar los avances y las tendencias de la literatura sobre el arte como inversión, y delinear líneas de investigación a ser desarrolladas.
Diseño/metodología/enfoque
Este trabajo reúne, analiza y discute críticamente los atributos de inversión del arte, en general, y latinoamericano, en particular.
Hallazgos
La mayoría de los estudios reportan que el arte (tanto el arte, en general, como el arte latinoamericano, en particular) ha ofrecido rendimientos reales positivos, aunque relativamente bajos, los cuales tienden a ser inferiores de los de las acciones y a ser similares a los de los bonos. El arte tiene una baja correlación con otras inversiones.
Limitaciones e implicaciones de la investigación
La literatura sobre los atributos del arte latinoamericano como inversión es limitada. Es de esperar que nuevas investigaciones permitan ir cerrando la brecha del conocimiento con respecto a esta parte del mercado del arte a la par que éste continúe creciendo.
Implicaciones prácticas
Los estudios de arte latinoamericano sugieren, similar a las investigaciones sobre otros segmentos del mercado del arte, que las obras de arte valen más, ceteris paribus: cuando el artista es más reputado, a medida que el área de las obras es mayor, si han sido ejecutadas en óleo, y cuando son subastadas en las casas de subastas Sotheby’s o Christie’s. En el trabajo se detallan, además, una serie de implicaciones prácticas para los participantes del mercado de arte.
Originalidad/valor
Hasta donde se ha podido comprobar, esta es la primera revisión exhaustiva acerca de los atributos del arte latinoamericano como inversión. Los resultados de esta investigación son de utilidad para: académicos, coleccionistas de arte, casas de subastas, galeristas, y demás participantes en el mercado del arte.
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Richard Grover and Christine Grover
Residential property price indices (RPPI) are widely used to monitor trends. This article aims to pose the question as to whether the choice of methodology is significant or…
Abstract
Purpose
Residential property price indices (RPPI) are widely used to monitor trends. This article aims to pose the question as to whether the choice of methodology is significant or whether there are material differences in average prices, price trends, and market turning points between RPPI.
Design/methodology/approach
The differences between RPPI are explored for the UK, which has RPPI that use different methodologies and capture data at different stages in the transaction process. The different approaches are compared and contrasted.
Findings
Comparisons between RPPI indicate that there is a relatively low degree of association between them, particularly during periods of recession. There is a trade off between the timeliness with which the RPPI is produced and the reliability of the price data on which it is based. The RPPI that make use of the most reliable price data do not have access to the richest data about individual properties, exposing them to the risk of divergent groups of properties being aggregated together.
Research limitations/implications
There are certain types of RPPI that are not found in the UK, principally median indices and sale price appraisal ratios so that the study is confined to mix adjustment, hedonic and repeat sales approaches.
Practical implications
Those relying on RPPI should exercise caution over their use and recognise that in periods of recession in particular their results may differ materially.
Social implications
Economic policy makers and financial services regulators should adopt a cautious approach to the use of RPPI and not to become unduly reliant on a particular index.
Originality/value
The literature on RPPI tends to focus on the statistical techniques used to compile them, but neglects how these are related to the problems of data capture issue. By looking at the relationship between the statistical methodology and where in the transactions process data are captured it is able to bring another perspective to the debate about which methods are most effective and which should be relied on for public policy.
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