Residential Prices Research Articles

Residential property market in Malaysia: an analysis of price drivers and co-movements

PurposeThe purpose of this paper is to identify the drivers of residential price as well as the degree co-movement of housing among different states in Malaysia.Design/methodology/approachThis study adopted an advanced econometrics technique: the dynamic autoregressive-distributed lag (DARDL) and – the time-frequency domain approach known as the wavelet coherence test. The DARDL model was applied to identify the cointegrating relationships and the CWT was used to analyze the co-movement and lead–lag relationships among four states’ regional housing prices. The extracted data were mainly on annual basis and comprised macroeconomics and financial factors. Information with regard to residential prices and other variables was extracted from the National Property Information Centre (NAPIC) website, the Central Bank of Malaysia Statistics Report, the Department of Statistics, Malaysia, I-Property.com and the World Bank (WB). The data covered in this study were the pool data from four main states in Malaysia and different categories of residential properties.FindingsThe empirical results indicate that there were long-run cointegration relationships between the housing price and capital gain and loss, rental per square feet, disposable income, inflation, number of marriages, deposit rate, risk premium and loan-to-value (LTV) ratio. While the wavelet analysis shows that (1) in the long run, Kuala Lumpur housing price having strong co-movement with Selangor, Penang and Melaka housing prices except for Johor and (2) the lead–lag relationship also postulates Kuala Lumpur housing price having in-phase category with Selangor, Penang and Melaka housing prices except for Johor.Practical implicationsThis study offers relevant practical implications. First, the study proposes an active collaboration between the private sector and government support which may help to smooth the pricing issue of residential properties. More low-cost residential projects are needed for focus groups including middle- and low-income earners. Furthermore, the results are expected to provide real estate investor in Malaysia, an improved understanding of the regional housing market price dynamics.Originality/valueThe findings of this study were obtained from various reliable sources; therefore, the results reflected the analysis of price drivers and co-movements. Furthermore, findings from this study lend some support to the argument on the rise of residential prices and offer several policy implications from a practical point of view with regard to the residential market.

Improvements in Neighborhood Socioeconomic Conditions May Improve Resident Diet.

Neighborhood socioeconomic conditions (NSECs) are associated with resident diet, but most research has been cross-sectional. We capitalized on a natural experiment in Pittsburgh, Pennsylvania, in which 1 neighborhood experienced substantial investments and a sociodemographically similar neighborhood that did not, to examine pathways from neighborhood investments to changed NSECs and changed dietary behavior. We examined differences between renters and homeowners. Data were from a random sample of households (n=831) in each of these low-income Pittsburgh neighborhoods that were surveyed in 2011 and 2014. Structural equation modeling tested direct and indirect pathways from neighborhood to resident dietary quality, adjusting for individual-level sociodemographics, with multigroup testing by homeowners versus renters. Neighborhood investments were directly associated with improved dietary quality for renters (β = 0.27, 95% confidence interval (CI): 0.05, 0.50) and homeowners (β=0.51, 95% CI: 0.10, 0.92). Among renters, investments also were associated with dietary quality through a positive association with commercial prices (β=0.34, 95% CI: 0.15, 0.54) and a negative association with residential prices (β=-0.30, 95% CI: -0.59, -0.004). Among homeowners, we did not observe any indirect pathways from investments to dietary quality through tested mediators. Investing in neighborhoods may support resident diet through improvements in neighborhood commercial environments for renters, but mechanisms appear to differ for homeowners.

Response of residential water demand to dynamic pricing: Evidence from an online experiment

Abstract Urban water demand management is key to water supply sustainability in high-density, water-stressed areas throughout the world, and emerging technologies could transform it. In particular, smart metering could allow for conserving water by dynamically changing prices to reflect water scarcity and supply cost variability. Yet, little is known on end-users’ reaction to short-term price changes, an essential determinant of the effectiveness and acceptability of dynamic water pricing. This paper reports on the design and results of an online experiment that measures end-users’ water consumption decisions when confronted with time-varying prices, and investigates the interaction between pricing and water scarcity awareness. We design a series of treatments where players must indicate their shower length given different water prices, price variations, and scarcity scenarios. Beyond corroborating the theory that higher prices lower usage, the experiment finds evidence of a dynamic pricing effect: users respond more strongly to a given price if they have been exposed to a lower price before. This suggests short-term residential price increases could be effective at boosting water conservation.

The Influence of Floor Type of Multi-Family Residential on the Transaction Price and the Estimation of Utility Ratio among Floors

In Taiwan’s multi-family residential, there are some problems in the previous research on the utility ratio among floors, including the failure to consider the difference in total number of floors, the excessive research scope and the residential price without deducting the parking space price. This research hopes to improve the problems of previous research, select 1,172 data of multi-family residential with total number of floors of 12, 15 and 22, and use the hedonic price model to establish the utility ratio among floors of residential buildings, and then compare the difference between absolute floors and relative floors on the transaction price. The empirical results found that in the comparative analysis of absolute floors and relative floors, the variable of relative floors is significant, showing that the residential price is significantly different with different total number of floors, and the total number of floors is higher that the residential price is higher; the importance of absolute floors on the residential price isn’t high. In the model of utility ratio among floors of different total number of floors, the utility curves are distributed in zigzag pattern. Taking floor 4 as the base floor, the floor price difference is higher on floor 1 and near the top floors, and the floor price difference of other floors is not significant.

ANALYSIS OF TURKISH RESIDENTIAL CONSTRUCTION MARKET DYNAMICS FOR THE PERIODS OF 2010–2015, 2015–2019, AND PROJECTIONS FOR THE FUTURE

The Turkish residential market supported by macro-economic developments is of great importance for the country's economy and the construction industry. The main purpose of this study is to analyze the Turkish residential construction market dynamics, especially in terms of price-cost and supply-demand regimes and conduct future projections. For this purpose, analysis of construction cost and residential price indexes, total and mortgaged residential sales, and construction and occupancy permits were evaluated utilizing institutional data. In addition, positive and negative effects of the changes in the residential prices in the macro scale were examined. After, conducting the residential price and cost change analysis for between 2010-2023, future stock volume and residential market projections were carried out. As a result of the analysis, we can divide the residential market into 3 periods: positive development period between 2010 and 2015, the recession period from 2015 to 2019, and the period after 2020. In the projection, depending on the supply contraction and the results of demand changes, price and cost increases, the current residential stock volume will reach its lowest level by 2023. Following this, the last period is expected to reach a more balanced residential market shaped by need-based purchases rather than individual investments.

The Influence of Public Facilities on the Transaction Price of Multi-Family Residential in Xitun District

The ratio of public area in Taiwan's multi-family residential is gradually increasing, and the items of public facilities are becoming more and more diversified. Most researches only classify them, however, it is rarely discussed how the connotation and diversity of public facilities affect residential transaction prices? This study intends to classify the public facilities in 22 multi-families residential near the Zhongke Shopping Plaza in Xitun District, Taichung City and give them diversity scores. The study uses hierarchical linear model for analysis, residential price as the dependent variable, diversity of public facilities scores as the independent variable of group-level, and public area, private area, age and floor as independent variables of individual-level. The empirical results found that floor, public area, and private area have positive and significant influence on residential transaction prices; when controlling the influence of individual-level explanatory variables on residential transaction prices, the diversity of public facilities at the group-level has a positive effect on the average residential transaction price of residential buildings.

Identifying spatiotemporally-varying effects of a newly built subway line on land price: Difference and correlation between commercial and residential uses

This study examines the spatiotemporal relationship between the newly built subway line and land price, focusing on difference and correlation between commercial and residential land uses. For a spatiotemporally sensitive analysis, Geographically and Temporally Weighted Regression (GTWR) method is used to test land price data in Daejeon, South Korea. A new approach is suggested in the bandwidth selection process of GTWR to consider the interactive relationship between commercial and residential land uses. With the proposed approach, this study develops models to measure the effects of a newly built subway line on commercial and residential land prices. The estimates of the models indicate that commercial and residential land uses have an interactive relationship, and the effects from the nearby environments indicate geographically and also temporally different patterns for each land use. The distribution of coefficients shows that the effect size is greater on the commercial land price than on the residential land price. However, the geographical effect is wider on the commercial land price, while the temporal effect is longer on the residential land price. This study provides a novel perspective on empirical research about the effects of newly built public transit on land prices. Furthermore, the results imply that land price estimation needs to consider the mutual relationship between land uses and to be differentiated by the type of land use.

Marginal and average prices of land lots should not be equal: A critique of Glaeser and Gyourko’s method for identifying residential price effects of town planning regulations

Glaeser and Gyourko’s method of measuring the gap between marginal and average land prices of housing lots has become a popular way of demonstrating the degree to which planning controls, or ‘regulatory taxes’, increase residential land prices. This has led policy-makers across the globe to focus on town planning as a critical determinant of rising home prices. We show, however, that Glaeser and Gyourko’s method shows no such thing. Instead, the price gap is a product of the location premium of land, diminishing returns to buyers of residential land size, and historical city development patterns. Numerous shortcomings are identified in their theoretical model, including that (a) they ignore that development happens over time; (b) their ‘regulatory tax’ is simply the location value of land; (c) they reason inconsistently about the source of land prices, arguing that land at the margins is scarce but locations for whole housing lots are not; and (d) there are no optimal lot sizes nor subdivision incentives in their model. Standard price-taking models of residential land markets that recognize that locations are scarce contain none of these limitations and provide a better interpretation of land price patterns. Empirically, we show that Glaeser and Gyourko’s method finds a high ‘regulatory tax’ even in the absence of regulatory constraints using both simulated suburb development scenarios and historical land sales data from colonial Australia and ancient Mesopotamia. In short, there is no information regarding the effect of planning controls on the supply of new dwellings in a comparison of marginal and average land prices, and this method should not be relied upon to inform planning and housing policy decisions.

The Role of Total Number of Floors under Age Influencing Residential Price Utilizing the Mediation Analysis

We examine here how does age and total number of floors affect residential prices in Taichung City Taiwan. In recent years, with the increase in land prices and the improvement of construction technology, number of floors in multi-family residential towers has also increased in Taiwan. There are many factors that affect the transaction price of multi-family residential towers. The research object of this study is 2,500 transaction data of 22 multi-families residential towers in the most densely populated area near Zhongke Shopping Plaza in Xitun District, Taichung City April 2012 to March 2019. First, this study uses the hedonic pricing model explore the significance of factors that affect the transaction price of multi-family residential towers with residential prices as the dependent variables, number of floors, age, land transfer area, building transfer area, story as independent variables. Then this study uses causal steps and bootstrapping to check the intermediary effect of number of floors between age and residential price. The statistical results found that number of floors, age, land transfer area, and building transfer area all significantly affect residential price. This study found that age affects residential price through number of floor height that represent number of floors playing the role of full mediation between age and residential price.

Supply-side drivers of residential price in Malaysia: a qualitative analysis from developers' perspectives

PurposeThis study aims to explore the issue of residential price in Malaysia from a supply-side perspective. The views are directly obtained from medium and small-scale developers in Malaysia.Design/methodology/approachWe used the semi-structured interview for analysis purpose. The samples are from property developers (medium and small-scale developers) and a single respondent from the Malaysian National House Buyers Association. We used the judgmental sampling method to choose respondents for this study. The interview results went through content analysis in order to derive common themes, resulting in the identification of four main themes.FindingsFirst, developers view that the residential market is growing at a good pace, albeit slowly. However, the issue of unaffordability and construction costs remains to haunt the progress of property development in Malaysia. Second, from supply-side perspectives, there are several main reasons why the residential prices in Malaysia are uncontrollable: (1) costs of construction, (2) taxes, (3) existing units, (4) location and (5) urbanization. The third theme is the government support in catering to the needs and wants of middle- and lower-income earners. Most respondents agreed that the government has been providing low-cost houses supported by various incentives. Finally, on price control strategies for residential units, recommended suggestions are as follow: embracing different methods of construction styles, promote the uses of local materials instead of relying on imported materials, continuously review rules and regulations, provide more incentives and to build partnerships between the government and private companies on affordable housing projects.Practical implicationsThe research is expected to present solid findings and claimsseveral significant contributions, especially policy-wise. We believe this contribution will enrich the existing literature on residential market. The present study is also predicted to produce noteworthy findings to all stakeholders in the real-estate industry, such as potential home buyers and existing house owners to housing developers, marketers and government policy regulators, as well as academic institutions.Originality/valueThis study is expected to enrich the existing literature available in the context of real-estate finance such as property price and property policy in emerging economies like Malaysia. One distinguishing factor which differentiates this study from others in the literature is the feedbacks obtained from medium and small-scale developers, therefore deemed to be more solid and reliable. The current research in real-estate finance is mainly focused on empirical analysis and we believe this study will offer a breakthrough view on the matter of residential market in Malaysia.

Possible effects of potential lahars from Cotopaxi volcano on housing market prices

The recent awakening of the Cotopaxi volcano in Ecuador set the conditions to estimate and verify the possible effects of potential lahars on residential housing unit prices. About 300,000 people live in the Los Chillos valley, which is the northern natural drainage of Cotopaxi’s lahars; therefore, the effects on house values can be significant. We have used housing information from 2016 of 240 properties to settle a hedonic price model within and outside of the lahar’s area. The regression model has a significant R2 value of about 0.723. The variable that determined the effects of potential lahar on the hedonic model demonstrates that the value of a residence house unit will increase its price by 41.99 USD for each meter away from the lahar path. Our study suggests that environmental disamenities generated by natural hazards will have a negative effect on residential house unit prices and we infer that consumers would be willing to pay a higher price in order to avoid such potential disamenities.

Mechanism of value capture on gated community housing by developers in Jakarta Metropolitan Area

We reviewed the state of the art on gated community development, property valuation, and value capture literature to discuss how gated housing serves as a mechanism for land value capture by developers. Land value capture, instead of measures such as urban fears and segregation, justifies developers’ action to build impenetrable walls around their residential development projects. Previous works on housing markets in JMR suggests that housing products tend to be overpriced. We found early indications that enclosing physical boundaries on housing projects were positively correlated to residential price growth in Jakarta Metropolitan Regional (JMR). We used a study case embedded design for this initial research with mixed analysis data method. Our results show and argue that the real estate developers’ motive to install walls and gates in their residential projects is to enhance the existing land value. The ratio of land value on housing inside the gated area is 1,5 up to 7 times more higher than the surrounding area outside the gate. Our study helps to develop an understanding of the motive behind the gating trends in housing development projects. All of the information is substantially useful to help public sector working on managed residential land sustainably.

Exploring the Influence of an Urban Water System on Housing Prices: Case Study of Zhengzhou

A good living environment is the foundation of sustainable housing. Exploring the external influence of environmental factors on housing prices is one of the key issues in the field of real estate research; however, the current study of the urban water landscape on the spillover effect of housing prices is not sufficient. Taking the Zhengzhou residential market as an example, this paper analyzes the effect of an urban water system on residential prices by constructing the traditional Hedonic price model, spatial lag model (SLM) and geographically weighted regression model (GWR) by selecting the main water system and 678 points of residential data in the main urban area. The results show that the accessibility of rivers and lakes and the width and water quality of rivers have a significant effect on residential prices, and the impact of lakes is greater than that of rivers. The spatial heterogeneity of the water system effect is further revealed by adopting spatial lag model and geographically weighted regression model, and the effect of the water system is gradually reduced from the eastern urban area to the western urban area. The results of this study are of great practical significance to the government’s municipal planning, water environment management and housing market management.

HUBUNGAN INDEKS HARGA PROPERTI RESIDENSIAL DAN KREDIT PERBANKAN

Demand and supply in housing market depends on macroeconomic conditions such as Gross Domestic Product, interest rates, and housing prices. Changes to these variables are related to changes in housing market. This study aims to examine the relationship of housing prices, Gross Domestic Product, mortgage interest rate to Banking Credit. Knowing the relationship will be useful in making strategic decisions related to property investment and portfolio management. Housing price using Residential Price Index in primary market will be grouped into three parts based on land area of residential property consist of small house type, medium house type, and big house type. Data processing using Auto Regressive Distribution Lag (ARDL) bound test model to test the relationship between variables. The result of the research shows that there is a significant long run cointegration on the variable of housing price, Gross Domestic Product, and mortgage interest to banking credit. Furthermore, in testing each housing price group, the test results also show the relationship between these variables.

Assessing the Impact of Road Traffic Externalities on Residential Price Values: A Case Study in Madrid, Spain.

This paper describes a study of the relationship between undesired road traffic externalities and residential price values in the Spanish city of Madrid. A large database was gathered, including the price and characteristics of 21,634 flats and road traffic intensity at 3904 different points across the city. The results obtained by a hedonic model suggest that both distance from the traffic measurement point and average daily traffic are significantly related to the price of residential properties, even after controlling for structural and neighbourhood variables. Distance to traffic areas has a positive impact on dwelling prices, whilst these are negatively related to traffic intensity.

The Impact Of Macroeconomic Variables On Real Estate Price Forecasting Modelling In Abuja Nigeria

This paper examined the impact of macroeconomic variables on real estate price forecasting modelling in Abuja, Nigeria using the family of Box-Jenkins ARIMA models. The ARIMA and ARIMAX models were used to forecast real estate residential price in Abuja, Nigeria using quarterly data from 2000Q1 to 2017Q in Naira (N). The outcome revealed that, macroeconomic variables such as consumer price index, price of crude oil, exchange rate of Naira against US dollar, GDP, interest rate, household income has significant positive impact on the real estate residential price forecasting models of 2 bedroom flat, 3 bedroom flat and 5 bedroom flat, while they have strong negative impact on the price forecasting model of 4 bedroom flat. Moreover, ARIMA and ARIMAX provides best out of sample forecasting models.

Is There a Kuznets Curve Effect for China’s Land-Driven Development Mode?

This paper empirically investigates whether the contribution of land-driven development to economic growth has declined along with the Kuznets curve hypothesis by using a nonlinear dynamic model. Over the past 40 years, Chinese local governments have raised commercial–residential land prices, mortgaged reserve land to gain valuable funds to facilitate urban construction and then improve urbanization, and driven down industrial land prices to attract foreign direct investment (FDI) and promote industrialization. By controlling the land market, this typical land-driven development mode has played a significant role in the process of local industrialization and urbanization. However, with the change in cities’ internal and external conditions, many problems hidden in this mechanism have begun to emerge. The results from the dynamic panel data method reveal that, at the national level, the effect of land supply on local economies initially indicates an increase and then a drop, which is an inverted U-shaped curve, or the Kuznets curve effect. The impact of land-driven development has declined in China’s economic transformation period, but at the regional level, in the eastern and mid-western regions, there is a different reason.

Strategic behavioral pricing of the private residential development market – a simplified experimental approach

PurposeThis paper aims to examine the behavior of “rational” residential developers, under game theory, for their pricing strategy in a competitive environment.Design/methodology/approachResults show that residential developers cooperate implicitly for long-term benefit, leading to a slow-down in sales. Developers are motivated to deviate from cooperating at the beginning and at the end of successive periods in a sub-market. Relatively high profits, earnable in the first few periods, provide an allowance to undercut prices and improve sales. For the last few periods, the punishment for any deviation from cooperating is insignificant or zero. Note that the first-mover advantage in a new market is evident. On the effect of uncertainty on the developer’s residential prices, results show that as uncertainty increases, prices decrease while price variability increases.Research limitations/implicationsThis study highlights the merits of a uniquely simplified experimental research design for the strategic behavioral pricing of the private residential development market using a game theoretic approach.Practical implicationsThis study enhances the understanding of the residential development strategy of developers in the residential development market.Originality/valueThere is limited research on pricing strategy for the private residential development market in Asia.

The effect of negative information on the volatility of real estate residential prices in Abuja, Nigeria

PurposeThe purpose of this paper is to determine the effect of negative information on the volatility of real estate residential prices in Abuja, Nigeria.Design/methodology/approachThe empirical research covers a sample period of 17 years from the first quarter of 2000 to the fourth quarter of 2017. The leverage effect of Abuja’s real estate residential price volatility is determined. Exponential generalised autoregressive conditional heteroscedasticity is used to determine the ARCH shock, GARCH persistence and the leverage effect of the volatility of residential prices in Abuja.FindingsThe research found that the volatility of real estate prices varies from one category of residential property to another. The leverage effect was found only in the price of two and three bedroom flats in Abuja.Originality/valueThe findings provide useful information on the volatility of real estate prices for real estate investors. The study has policy implications for the regulation of measures that gradually checkmate the patterns of volatility in the Nigerian real estate market. It also controls negative information (such as a fall of crude oil prices, high costs of building materials, inconsistency of macro-economic policies and insecurity and political uncertainty) which mainly raises the level of uncertainty in the market and exposes investors to risk.

Comovements and Spillovers in International Commercial and Residential Real Estate Markets

To what extent do the commercial and the residential estate markets move together across different countries? Do the shocks originating in one of these markets spillover to the other markets? We answer these questions by applying a modified version of the dynamic factor model to the commercial and residential real estate prices in the Euro area, Hong Kong, Singapore and the U.S. This modified dynamic factor model decomposes the price growth in these two real estate markets into common, spillover and idiosyncratic components. The results show significant heterogeneity in the relative importance of these three components in the evolution of commercial and residential price growth across different countries and across time. Our findings suggest that the spillover from residential to commercial real estate market dominates the spillover from commercial to real estate market for all the countries in our sample. We also find that common component accounts for a large fraction of the price movements in the residential markets in the EU area and the U.S, whereas spillover and common component together explain more than two-third of the variations in Hong Kong and Singapore. We also find that the role of spillover from one market to another increased significantly during the financial crisis of 2008-09.