Real Estate Market Price Research Articles

The need for re-engineering in the real estate appraisal system in Turkey

Real estate appraisal in Turkey is one of the areas that need restructuring in the field of land administration. Although this requirement has been frequently expressed in recent years, systematic attempts to solve the problem do not seem to be available yet. At the solution stage, in addition to the creation of some of the work to be done, legal and institutional structures will be needed in real characteristics and precedent transaction price databases. In appraisal, performance and maintenance of databases will be achieved by utilising development of models to perform mass appraisal, and a presentation will be made to the user regarding the specified values that may be listed as the creation of mechanisms. In this context, it is argued that the Turkish real estate appraisal system needs to be re-engineered. Primarily for this, there must be an appropriate Law on Real Estate Appraisal and a governing institution for implementing this law. Under the leadership of the lead agency, real estate characteristics and market price databases should be built for usage in real estate appraisal.

Mathematical Model of Forecasting the Residential Real Estate Market Prices Level

The authors consider the residential real estate market as a complex socio-technical system, for the prediction of which it is advisable to use a combination of classical methods of forecasting and soft computing or intelligent data processing. The development forecast of the residential real estate services market with the help of foresight technologies is made. We performed the analysis and identified the main factors acting in the market, and their impact on the development of market trends. A mathematical model of residential real estate value forecasting based on the theory of fuzzy sets is developed.

Cultural heritage in sustainable development

PurposePreservation of historic structures meets ecological criteria of sustainable development. In Mount Lebanon, the traditional house is a cultural asset built of native stone one-meter thick double-wythe walls. Today, lack of public policies is causing those environmental assets to approach extinction. The paper aims to discuss this issue.Design/methodology/approachThe methodology uses multivariate regression on 128 data points. A mathematical model is developed and empirically tested on public attitudes toward restoration. Independent variables represent the need for protectionist policies, X1; contribution of restoration to environmental sustainability, X2; contribution to culture, X3; and financial benefits, X4.FindingsIt is found that stone houses transfer heat significantly slower than modern construction. There is a statistically significant and positive correlation with X1, X2, and X3, but negative with X4, most likely due to favoring return on investment of multistory buildings over the attractiveness of stone houses.Research limitations/implicationsAs future research implications, the undergirding of urban planning policies need to be revisited. Current policies neither protect heritage, nor offer legal means to restore heritage houses.Practical implicationsPractical implications include revisions to building laws in Mount Lebanon, as they marginalize old stone structures. Environmental valuation techniques, use value and existence value, are recommended.Social implicationsSocial awareness needs to be built about valuation techniques to account for complex assets that cannot be approximated through short-term real estate market price. Social rather than financial cost-benefit analysis must be performed to quantify environmental assets.Originality/valueThis research illustrates a pilot restoration project with critical issues faced by heritage stone houses. These assets are underrepresented in building laws which warrants social and environmental activism.

Height restrictions and housing prices: A difference-in-discontinuity approach

In this paper we exploit the enactment of a city-level building height-restriction-law in some, but not all, counties located in the largest city of northeast Brazil to investigate how restrictions to urban land-use affect real estate market prices. Using a difference-in-geographic-discontinuity design, we show that the imposed restriction led apartments (houses) to experience a significant increase (decrease) in unit prices.

Realizacja programu „Mieszkanie dla młodych” w kontekście regionalnych różnic w dostępności dochodowej mieszkań

The aim of the study was to assess the co-existence of housing price limits eligibility for participation in the MdM program with indicators of income availability of housing in voivodship cities of Poland. Methodology of the study: The study examines the relation of price limits (qualifying the flat to participate in the program) to the average real estate market prices in voivodeship cities of Poland. The calculated indicators were compared with housing income availability indicators and the number of contracts established under the MdM program. The analysis was based on data of Bank Gospodarstwa Krajowego, National Polish Bank, and Local Data Bank for the years 2014-2015. Results: The research indicated that the price limit indicators under the MdM program were higher in cities with higher income housing availability on the secondary market, which, however, did not take place in the primary market. Potentially, it could have influenced greater use of funds under the program in cities with higher income housing availability. The analysis of the participation rates under the program indicates, however, that such a structure did not translate into regional variations in the use of support under the program.

Determination and Countermeasures of Real Estate Market Bubble in Beijing

In recent years, the real estate market price is staying at a high level. This thesis makes a deeply research on what it influences China’s economic development and social stability. The thesis studies the real estate market price bubble in Beijing by Ramsey model, from the thesis, we can find the serious problems about the market bubble and put forward countermeasures and suggestions in dealing with it for the government, real estate business and residents.

Real Estate Price Dynamics and the Value of Flexibility

This paper presents a model of real estate asset price dynamics based on empirical evidence, economic theory, and common sense. We note important differences between real estate versus stock market price dynamics. We then use this model to simulate the investment performance of archetypical property investments, in stabilized income-producing property, and in multi-asset development projects. We quantitatively explore the effects of uncertainty on investment performance, for example, the positive skew in the valuation distribution and the positive bias in the pro-forma return compared with the expected return due to Jensen’s Inequality. We then focus on the value added by flexibility, including various types of real options in development projects. We consider the value of resale timing flexibility in stabilized property investment, and the value of production delay and product switching options in the development project. We find that with typical real estate price dynamics, flexibility adds considerable value, and greatly improves the expected return. In stabilized property investment, resale timing flexibility can add 25% to the private valuation of the property. In multi-asset development, we find that timing options are redundant within themselves, but additive with product type options. Delay options provide significant downside protection, and combined with product switching can add over one-third to the value of the project as measured by its implied bid-price for the land.

FACTORS AFFECTING THE MARKET PRICE OF COMMERCIAL REAL ESTATES IN NAIROBI. A CASE STUDY OF HURUMA ESTATE

Purpose: The study sought to determine the factors affecting the market price of commercial real estates in Nairobi. A case study of Huruma estateMethodology: This study employed descriptive survey design. The target population comprised of both managerial rand non-managerial employees in the real estate agencies. The real estate agencies registered by Kenya Property Developers Association (KPDA) and operating in Huruma area are 69 in number. The study sample comprised of 30% of all real estate firms registered by Kenya Property Developers Association (KPDA) in the region. Therefore, the sample size is 21 firms. The use of census survey was employed for statistical research, population count or business marketing purposes. Primary information was gathered by use of a Likert scale questionnaireResults: The result displays results of responses regarding the first variable which was rent as determinant of market price of commercial real estate. This finding was supported by an overall responses mean of 3.94 which means that more respondents were agreeing with the statements on this objective in the questionnaire. The responses were also spread from the mean at a 0.779 standard deviation. The second objective was to establish the effect of transport infrastructure on the market price of commercial real estate. The findings show that most of the respondents agreed with most of the statements as support by a mean score of 3.89. The responses were also spread from the mean at a 1.045 standard deviation. The third objective was to establish the effect of security on the market price of commercial real estate. The findings show that most of the respondents agreed with most of the statements as support by a mean score of 3.80. The responses were also spread from the mean at a 1.102 standard deviation. The last objective was to establish the effect of social amenities on the market price of commercial real estate. The findings show that most of the respondents agreed with most of the statements as support by a mean score of 3.77. The responses were also spread from the mean at a 1.056 standard deviation.Unique contribution to theory, practice and policy: The study recommends that investors should invest in a way to ensure fair rent on the tenants so that the worth of such property value is not compromised by their rental charges ensuring the tenants enjoy and experience satisfaction. Adequate transport infrastructure should be ensured in making investment decisions by investors as proper infrastructure increases property value. Security and social amenities should be improved and where necessary increased for such measures are a positive contributor to commercial real property value.Keywords: Market Price, Rent, Transport Infrastructure, Real Estate, Social Amenities, Security

Comparing Ask and Transaction Prices in the Swiss Housing Market

We analyze the relationship between ask and transaction prices in the Swiss residential real estate market over the 2005-2015 period. First, we present strong evidence that ask and transaction prices are co-integrated across different market segments, but they do not Granger-cause one another. Second, we analyze the cross-sectional distributions of ask and transaction prices / per living space and conclude that they do not follow the same distribution, with the distribution of transaction prices close to a log normal distribution and the distribution of ask prices exhibiting slightly fatter tails. Finally, we show significant evidence that transaction prices tend to exceed ask prices during protracted booms and bubble regimes. We discuss these empirical patterns in light of theoretical housing search models, and provide support for the hypothesis that the 2005- 2015 Swiss market has been dominated by an auction-like dynamics. Hence, although ask prices constitute a suitable proxy to follow the development of the Switzerland's real estate market, especially given the sparsity of available transaction data, they might be prone to underestimate the extent of price increases when the market is booming, and the magnitude of the correction when the market enters the bust phase of the housing cycle.

Рыночный риск на рынке недвижимости России и финансовые инновации

The article underlines the latest trends in real estate prices in Russia, which helps to record the increasing negative effect of real estate risks on various groups of economic agents. The consequences of negative dynamics in mean real estate market prices could be relaxed by real estate derivatives market construction, which has been unclaimed yet by the market participants due to favorable economic conditions. The article provides the ground for the necessity of real estate risk hedging for various groups of economic agents, viability of real estate derivatives utilization for the purposes of hedging and their application to further financial innovations.

Interdependence of Property Prices and Building Vacancy Rates in Residential and Commercial Real Estate Markets: Hong Kong and Singapore

In this research, we attempt to find the statistical interdependent relationship between vacancy rates and property prices in residential real estate market and commercial real estate market in Hong Kong and Singapore, the two cities sharing lots of characteristics in common. Vector autoregression (VAR) models and Granger causality tests are conducted to find out the causal relationship between residential housing or office building vacancy rate and the prices in respective markets. We also conduct vector error correction model if the variable pair is cointegrated at the same level.In the analysis of interdependence and VAR model estimation, prices and vacancy rates in Hong Kong residential real estate market and the commercial real estate markets in both cities do not significantly affect to each other. In Singapore residential market, lagged differenced vacancy rate negatively affects future differenced house price, the relation resulting from “fundamental driven effect.” For housing vacancy can be treated as excess supply in real estate market, the price will drop to decrease excess supply and to achieve long-term equilibrium when fundamental demand of residential house is less than supply, ceteris paribus. We also execute comprehensive market comparison of interdependence of property prices and vacancy rates and check the mutual effects of two variables in each type of real estate markets under the panel VAR dynamics. By vector error correction model (VECM), it is discovered that the long term relationship between vacancy rate and price exists in Singapore office building market. Moreover, the Singaporean office building differenced vacancy rate is affected by the deviations from the long term equilibrium relationship between price and vacancy rate. It is also found that, of the two types of property prices in Hong Kong, the long term relationship between residential house price and office building price exists.

Search Costs, Behavioral Biases, and Information Intermediary Effects

In many markets, buyers, sellers, and their agents have differential information about the quality of heterogeneous assets. We study negotiated transaction prices in the commercial real estate market, which is characterized by heterogeneous assets, illiquidity, and highly segmented local markets, all of which increase the importance of asymmetric information in negotiated pricing outcomes. Using 114,588 industrial, multi-family and office sale transactions that occurred during 1997–2011, we document that distant commercial real estate buyers pay, on average, premiums of 4 % to 15 % relative to local buyers, controlling for individual property characteristics as well as time fixed-effects. We also examine the extent to which the sources of these observed premiums are a product of higher search costs/information asymmetry problems associated with distance (search cost channel) or a result of reference-dependence preference/anchoring based on the price levels in the investors’ local market (behavioral biases channel). Our results suggest the observed price premiums are explained by distant investors who face higher search costs and are at an information disadvantage compared to investors located in closer proximity to the property. In contrast, anchoring plays a more muted role in explaining observed premiums. The use of an intermediary (broker) increases, on average, the acquisition prices of buyers and decreases the disposition prices of sellers by 3 % to 8 %. This result is consistent with the incentive real estate agents have to convince sellers to dispose of their properties too quickly and to convince buyers to search less and therefore pay higher prices.

A Study of Influence upon Inflation Posed by Volatility of Housing Price

In recent 30 years, countries from the world have attached great attention to the influence on inflation posed by asset price. Real estate market is a very important economic market for any country. Therefore, housing price has become a hot topic for discussion and research in China. Whether housing price will affect a country’s inflation or not and to what extent the effect will be are social focuses. Hence, it is feasible to theoretically apply Tobin’s Q Theory in this paper, combine the real estate market price with the assets replacement and study the inflationary impact posed by the housing price, through the application of the wealth effect theory. By using monthly statistics of China’s real estate market and inflation from the year 2005 to 2014, this paper will conduct a theoretical and empirical research on the influence that housing price has on inflation with the adoption of dynamic analysis methods including Granger Causality Test, impulse response and variance decomposition. Furthermore, this paper is featured with systematic and complete empirical thinking and methodology, comprehensive data selection and distinctive research results associated with the relationship between housing prices and inflations. According to the study result, housing price is the Granger Cause of inflation and will not drive inflation in short time. But as time passes, this effect will be gradually enhanced. This paper suggests that housing price and other price factors should be taken into consideration so as to establish a broad-sense inflation index in China.

Housing Affordability and Income-threshold in Social Housing Policy

The issue of affordable housing has again become crucial in ensuring a greater social equity, increasing social cohesion and reducing inequalities within metropolitan or regional systems which, in the current climate of severe economic crisis, have to respond to global challenges of development, innovation and sustainability.This study aims at building a system of knowledge about the housing affordability on the territorial scale, by which to identify the local characteristics of housing problems that could be solved through traditional planning tools or new practices of social housing, which involves private stakeholders and/or public administrations. This system of knowledge should include the analysis of the wealth distribution both in terms of income and real estate market price, and the calculation of the income-thresholds (based on the HAI-Housing Affordability Index) that filter the access to the real estate market. All these data are used to define the correspondences between groups of people and affordable housings, distinguishing them both by income and urban location. This approach is applied to the case study of the territorial system of the Province of Syracuse (Italy) and it allows appraising the gap between housing prices and income level in different areas of seven towns. To know the size and the spatial distribution of these gaps is a valuable tool to orientate the housing policy, to select the best model of social housing and to design the equitable parameters of social housing projects for each town.

A quantile regression approach and nonlinear analysis with Archimedean copulas to explain the movements of residential real estate prices

The primary objective of this paper is to explain the determinants of residential real estate prices in the largest real estate market in the oil-rich Gulf Cooperation Council (GCC) countries. We employ linear quantile regression analysis to investigate the impact of financial market conditions (stock market returns and volatility), key monetary policy, and macroeconomic variables (including short term interest rates, inflation rates, and crude oil prices) on the residential real estate price dynamics. The secondary objective of this paper is to investigate the nonlinear relationships among variables through the use of two different Archimedean copulas with upper and lower tail dependence. The empirical results consistently demonstrate that only the residential real estate index-inflation rate relationship is statistically significant for all quantiles. We also find a nonlinear relationship among stock market returns, crude oil prices, and the residential real estate index, where the dependence structure is asymmetric and orients toward the upper side of the distribution. This study has significant implications for the analysis of real estate markets, investors, portfolio managers and policy makers.

Risk-Neutral Valuation of Real Estate Derivatives

We propose a novel and intuitive risk-neutral valuation model for real estate derivatives. We first model the underlying efficient market price of real estate and then construct the observed index value with an adaptation of the price update rule by Blundell and Ward (1987). The resulting index behavior can easily be analyzed and closed-form pricing solutions are derived for forwards, swaps and European put and call options. We demonstrate the application of the model by valuing a put option on a house price index. Autocorrelation in the index returns appears to have a large impact on the option value. We also study the effect of an over- or undervalued real estate market. The observed effects are significant and as expected.

English

This research investigates the residential real estate market in an emergent European country, Romania. Using data from approximately 300 sales transactions and another 300 nationally relevant rent transactions conducted between midyear 2010 and midyear 2011, the real estate market prices and rental prices have been processed using statistical techniques such as the General Linear Model, in order to identify the characteristics of properties with a significant influence over the analyzed context. The results show that heterogeneous real estate location related and physical characteristics such as type of real estate, existence of an elevator, thermal insulation, finishing works and floor area are significant variables that influence real estate prices in Romania. Moreover, the paper offers a database in the form of descriptive statistics for asset pricing, in this case residential single-family properties, the same as for the Gross Income Multiplier. This represents a starting point in developing a statistical basis on which future studies can attempt to explain the pricing differences observed in real estate. Key words: Emerging market, real estate, appraisal, influential factors.

Pengaruh Tingkat Suku Bunga Dan Nilai Tukar Terhadap Indeks Harga Properti Residensial (IHPR) di Indonesia Tahun 2002-2013

This study aimed to analyze the macroeconomic factors such as exchange rate and interest rate in effect on the market price of the property and real estate in Indonesia (IHPR) during the years 2002-2013. Through the application of e-views, the causal relationship was found in time series data. VAR analysis and Granger Causality Test did not find any relationship between SBI and IHPR. However SBI affects EXCHANGE positively, and EXCHANGE affects IHPR. Every 1 point weakening of IDR in the previous period, assuming the IDR in the two previous periods fixed, the IHPR in year-t will increase by 0.004003 points. If IDR in two previous periods depreciated by 1 point with the assumption that the IDR at the previous period remains, then IHPR in year-t will increase by 0.007219 points. Keywords: SBI interest rates, IDR exchange rates, price of property, VAR, Granger Causality Test

실물옵션 기법을 응용한 부동산 가치평가 연구: 인구구조 변화를 고려하여

This study presents a new real estate value analysis model considering the changes in the population structure. We propose a new model that takes advantage of the binomial option model one of the techniques of real options and considers the changes in the population structure. The real estate market price data of Seoul city from year 2001 to 2012 were extracted and the correlation analysis between real estate prices and changes in the population structure was performed. The result shows that they have positive correlation with one year time lag. The coefficient between the real estate prices and demographic changes was estimated using the OLS analysis and included in the traditional binomial option model to calculate the value of the property. It is assumed for the future price prediction that real estate invested in Seoul in January, 2013 will be sold within five years. Analysis result shows that the values of real estate in September of 2013 were predicted as 583.5 million won in the new model and as 582.4 million won in the traditional model. This reflects that the new model considering the change of population change gives better realistic performance than the traditional one.

Study of Herding Behavior on China's Real Estate Market Price Fluctuations

Study of Herding Behavior on China's Real Estate Market Price Fluctuations