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Article
Publication date: 6 May 2021

Chung 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.

Details

International Journal of Housing Markets and Analysis, vol. 15 no. 2
Type: Research Article
ISSN: 1753-8270

Keywords

Article
Publication date: 29 March 2013

Anthony Owusu‐Ansah

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.

Details

Property Management, vol. 31 no. 2
Type: Research Article
ISSN: 0263-7472

Keywords

Article
Publication date: 21 August 2007

Jessica Lamond, David Proverbs and Adarkwah Antwi

The purpose of this research is to show how the measurement of the effect of flooding on house value can be invaluable information for professional valuers and homeowners alike…

2064

Abstract

Purpose

The purpose of this research is to show how the measurement of the effect of flooding on house value can be invaluable information for professional valuers and homeowners alike. In the UK, even for an event as devastating as the autumn 2000 flood, the number of properties affected in any one town is small and so robust estimation is problematic and methodology applied elsewhere needs modification. A new framework for analysing the effect of flooding on house value in the UK is presented.

Design/methodology/approach

Data issues play a crucial role in determining the methodology employed in any analysis. A repeat sales methodology is proposed which allows for the tracking of effects through time. The analysis can be extended to multiple sites via a block design thereby increasing the sample size.

Findings

Empirical analysis of one case study site demonstrates the inherent small sample problem and yet reveals patterns that fall in line with expected outcomes in many respects.

Research limitations/implications

The case study results are illustrative only. A programme of further analysis is planned which includes comparison of the new framework with more traditional approaches.

Originality/value

A novel methodology is developed tracking the temporal variability in flood effect. The minimisation of data requirements inherent in the model allows for transfer to multiple sites and easy updating of the analysis.

Details

Property Management, vol. 25 no. 4
Type: Research Article
ISSN: 0263-7472

Keywords

Article
Publication date: 1 February 2004

Sau Kim Lum

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…

1812

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.

Details

Journal of Property Investment & Finance, vol. 22 no. 1
Type: Research Article
ISSN: 1463-578X

Keywords

Article
Publication date: 9 March 2010

Le Ma and Chunlu Liu

This paper develops a new decomposition method of the housing market variations to analyse the housing dynamics of the Australian eight capital cities.

Abstract

Purpose

This paper develops a new decomposition method of the housing market variations to analyse the housing dynamics of the Australian eight capital cities.

Design/methodology/approach

This study reviews the prior research on analysing the housing market variations and classifies the previous methods into four main models. Based on this, the study develops a new decomposition of the variations, which is made up of regional information, home‐market information and time information. The panel data regression method, unit root test and F test are adopted to construct the model and interpret the housing market variations of the Australian capital cities.

Findings

This paper suggests that the Australian home‐market information has the same elasticity to the housing market variations across cities and time. In contrast, the elasticities of the regional information are distinguished. However, similarities exit in the west and north of Australia or the south and east of Australia. The time information contributes differently along the observing period, although the similarities are found in certain periods.

Originality/value

This paper introduces the housing market variation decomposition into the research of housing market variations and develops a model based on the new method of the housing market variation decomposition.

Details

International Journal of Housing Markets and Analysis, vol. 3 no. 1
Type: Research Article
ISSN: 1753-8270

Keywords

Article
Publication date: 10 August 2010

Wilfred K. Anim‐Odame, Tony Key and Simon Stevenson

The purpose of this paper is to provide technically robust indicators of housing market performance from the records held by the Ghana Land Valuation Board, through the…

Abstract

Purpose

The purpose of this paper is to provide technically robust indicators of housing market performance from the records held by the Ghana Land Valuation Board, through the construction of the first ever residential price and rent indices for the aggregate and disaggregate markets.

Design/methodology/approach

The approach involved time series produced from hedonic models using 3,250 transaction‐based data, running from 1992 to 2007, and documents on movements in capital and rental values in Accra and Tema, the dominant commercial conurbations in the country.

Findings

The paper makes a major contribution to knowledge and understanding of housing market dynamics in Ghana. The results suggest that the derived price and rent indices look, at first sight, reasonably plausible with cyclical trends showing weak and strong patches.

Originality/value

The paper focuses on the development of formal housing markets through a detailed case study of Ghana, and provides findings and models of a wider application in other emerging economies.

Details

International Journal of Housing Markets and Analysis, vol. 3 no. 3
Type: Research Article
ISSN: 1753-8270

Keywords

Article
Publication date: 1 January 2003

K.W. Chau, S.K. Wong, A.Y.T. Leung and C.Y. Yiu

There have been very few empirical studies investigating the value enhancement effects of refurbishment and most rely on cross‐sectional data, which cannot show the before and…

2397

Abstract

There have been very few empirical studies investigating the value enhancement effects of refurbishment and most rely on cross‐sectional data, which cannot show the before and after effects conclusively because of the heterogeneous nature of the properties. The problem of refurbishment is more complicated in buildings or housing estates with multiple‐ownerships, since refurbishment is a collective decision, which can sometimes be difficult to achieve. Uses panel data in Hong Kong to estimate the impact of refurbishment on the market value of properties in a large housing estate. The results show that the refurbishment brought about approximately a 9 per cent increase in the market value of the properties, which far exceeds the cost of refurbishment. Suggests that property owners of a housing estate will benefit if they can reach a collective decision on renovation.

Details

Facilities, vol. 21 no. 1/2
Type: Research Article
ISSN: 0263-2772

Keywords

Article
Publication date: 17 September 2019

Jennifer Cinefra, Urbi Garay, Claudia Mibelli and Eduardo Pérez

Relatively little is known about the determinants of the prices of paintings. The purpose of this paper is to analyse the price determinants of the art of Joan Miró, one of the…

Abstract

Purpose

Relatively little is known about the determinants of the prices of paintings. The purpose of this paper is to analyse the price determinants of the art of Joan Miró, one of the great masters of Modern Art.

Design/methodology/approach

The authors analysed 255 artworks by Miró sold at Sotheby’s and Christie’s between 2003 and 2017, and performed a hedonic price regression to measure the impact of a series of variables on the prices of this artist’s works.

Findings

Miró’s works command higher prices, ceteris paribus, when they were painted on canvas, were sold at Sotheby’s and in New York City or London, were traded during the evening session and depending on the period in which they had been painted, the size of their surface area, the number of words used to describe the respective lot and whether they had appeared in an art book. The prices of Miró’s paintings increased substantially between 2003 and 2008 and then declined, coinciding with the global financial crisis of 2009.

Research limitations/implications

The results were obtained from prices established in art auctions, which represent only one portion of the market.

Originality/value

This is the first exhaustive study carried out on the determinants of the prices of Joan Miró’s works. The artist represents an ideal case due to the large number of his works that have been sold at auctions. As yet, only studies of Pablo Picasso and Andy Warhol have been conducted. Joan Miró has well-defined artistic periods, which also allows us to determine the impact on the price of the works of the period in which it was created. This paper also offers a methodological contribution to parties involved in the art sector (artists, galleries, collectors, investors, museums, etc.).

Objetivo

Se conoce relativamente poco acerca de los determinantes de los precios de las obras de arte de artistas específicos. Este estudio analiza los determinantes de los precios de las pinturas de Joan Miró, uno de los grandes maestros del arte moderno.

Diseño/Metodología/Enfoque

Se analizaron 255 pinturas de Miró que fueron vendidas en Sotheby’s y Christie’s entre 2003 y 2017, y se estimó una regresión hedónica de precios con el objetivo de medir el impacto de una serie de variables en los precios de las obras de este artista.

Hallazgos

Las obras de Miró obtuvieron precios más altos, ceteris paribus, cuando estaban puintadas sobre lienzo, se vendieron en Sotheby’s y en la ciudad de Nueva York o Londres, se subastaron durante la sesión de la noche, y dependiendo del período en que se pintaron, el tamaño de su área, la cantidad de palabras utilizadas para describir el lote respectivo y si habían aparecido en un libro de arte. Los precios de las pinturas de Miró aumentaron sustancialmente entre 2003 y 2008 y luego disminuyeron, coincidiendo con la crisis financiera mundial de 2009.

Limitaciones de la investigación/implicaciones

Los resultados se obtuvieron a partir de los precios establecidos en las subastas de arte, los cuales representan solo una porción del mercado.

Originalidad/valor

Este es el primer estudio exhaustivo realizado sobre los determinantes de los precios de las obras de Joan Miró. El artista representa un caso ideal debido a la gran cantidad de sus obras que se han vendido en subastas. Hasta el momento, solo se han realizado estudios de Pablo Picasso y Andy Warhol. Joan Miró tiene períodos artísticos bien definidos, lo que también permitió determinar el impacto que en el precio de las obras podía tener el período en que éstas se crearon. Este trabajo también ofrece una contribución metodológica a las partes involucradas en el sector del arte (artistas, galerías, coleccionistas, inversores, museos, etc.).

Details

Academia Revista Latinoamericana de Administración, vol. 32 no. 3
Type: Research Article
ISSN: 1012-8255

Keywords

Article
Publication date: 7 August 2017

Urbi Garay, Gwendoline Vielma and Edward Villalobos

The purpose of this paper is to present the formulation of the first exhaustive price index for Argentinian (and other Latin American countries) visual artists using 5,069 works…

Abstract

Purpose

The purpose of this paper is to present the formulation of the first exhaustive price index for Argentinian (and other Latin American countries) visual artists using 5,069 works sold in auctions by 71 Argentinian artists during the years 1980-2014.

Design/methodology/approach

The authors estimated a regression of hedonic prices using the ordinary least squares method. When the regression was run and the results were analysed, the authors then estimated the annual price index of Argentinian artists’ work to then compare them with different financial and economic variables.

Findings

The average annual nominal arithmetic rate of return in dollars for Argentinian art during this period was 6.81 per cent, with a 29.11 per cent standard deviation. Argentinian art shows a low correlation with Argentinian and US companies’ shares and a slightly negative correlation with US bonds. This is the reason for artworks to be included in investors’ portfolios despite the relatively high volatility.

Research limitations/implications

Valuating works of art in Argentina can be explained by a series of their attributes. The benefits of art as an investment should be contrasted with factors including illiquidity and high transaction costs that are inherent when investing in works of art.

Practical implications

Argentinian artists’ works have higher prices when, ceteris paribus, they are dated; they are auctioned in either Christie’s, Sotheby’s, Galería Arroyo, Roldan & Cia, Meeting Art, or Naon & Cia; they are oil or acrylic paintings; they are larger in size – although the price increase is decreasing when the size of the painting increases; and when the artist dies before their work is auctioned.

Originality/value

This work presents the first rigorous price index of Argentinian artists’ works. Additionally, and as far as the authors have been able to observe, the time-period in this article is the longest that has been used in studies on art as an investment in emerging markets.

Propósito

Este trabajo presenta la elaboración del primer índice exhaustivo de precios de artistas plásticos de Argentina (y de cualquier otro país de Latino América) a partir de 5.069 ventas de obras de 71 artistas argentinos realizadas en subastas durante el período 1980-2014.

Diseño/metodología/enfoque

Se estimó una regresión de precios hedónica por el Método de Mínimos Cuadrados Ordinarios. Una vez corrida la regresión y analizados sus resultados, se procedió a estimar el índice anual de precios de obras de artistas argentinos, para posteriormente relacionarlos con diversas variables financieras y económicas.

Hallazgos

El rendimiento promedio aritmético nominal anual en dólares del arte argentino durante ese período fue de 6,81% con una desviación estándar de 29,11%. El arte argentino exhibe una baja correlación con las acciones de empresas argentinas y de EEUU y ligeramente negativa con bonos de EEUU, lo cual le confiere atributos para ser incluido en las carteras de los inversionistas, a pesar de la elevada volatilidad.

Limitaciones e implicaciones de la investigación

Se consigue que la valoración de arte en Argentina puede ser explicada por una serie de atributos de las obras de arte. Los beneficios del arte como inversión deben ser evaluados con la iliquidez y los elevados costos de transacción, entre otros costos, inherentes a la inversión en obras de arte.

Implicaciones prácticas

Las obras de artistas argentinos tienen precios más altos cuando, ceteris paribus: están fechadas, se subastan en Christie's, en Sotheby's o en Galería Arroyo, son ejecutadas en óleo o en acrílico, tienen un mayor área, aunque el aumento de precio es decreciente al aumentar el área, y cuando el artista ya había fallecido al momento de celebrase la subasta.

Originalidad/valor

Este trabajo propone el primer índice riguroso de precios de obras de artistas de Argentina. Además, y hasta donde hemos podido comprobar, el período utilizado en este trabajo es el más largo que se haya empleado en estudios del arte como inversión en mercados emergentes.

Details

Academia Revista Latinoamericana de Administración, vol. 30 no. 3
Type: Research Article
ISSN: 1012-8255

Keywords

Book part
Publication date: 30 December 2004

Daniel P. McMillen

The size and number of employment subcenters have increased in large metropolitan areas as the spatial distribution of jobs has become increasingly decentralized. Although…

Abstract

The size and number of employment subcenters have increased in large metropolitan areas as the spatial distribution of jobs has become increasingly decentralized. Although employment decentralization is not a new phenomenon, only recently have concentrations of employment outside the central city begun to rival the traditional central business district (CBD) in size and scope. Because of this change, neither theoretical nor empirical models in urban economics now rely solely on the traditional monocentric city model of Muth (1969) and Mills (1972). Instead, recent research incorporates some version of a polycentric model, a trend that Anas et al. (1998) document in their excellent review article.

Details

Spatial and Spatiotemporal Econometrics
Type: Book
ISBN: 978-0-76231-148-4

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