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The Paris Residential Market: Driving Factors and Market Behaviour 1973-2001

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Author Info

  • Baroni, Michel

    ()
    (ESSEC Business School)

  • Barthélémy, Fabrice

    ()
    (THEMA, University of cergy-Pontoise)

  • Mokrane, Mahdi

    ()
    (IPD France)

Abstract

In this paper we investigate the driving factors associated with the Paris apartment market. We explore a database of nearly 230 000 transactions for residential properties in the Paris area over the 1973 – 2001 period. We develop a factorial model that may capture the systematic link between residential prices and a set of predefined economic variables or a linear combination of these economic variables. We assume that capital growth rates in real estate are related to the variables we defined in the last paragraph. We measure this link which underlines the ‘true path’ of the real estate market: in that way we can develop an index as a function of many other indices. The methodology we develop, based on a multifactor approach to apartment price movements in the long run, has two main advantages over traditional indices. Firstly, we are able to identify the main driving factors for the Paris residential market. And secondly, the factors thus derived can be used to generate a “factor model” useful in comparison to existing capital growth indices and that provides valuable intuition for forecasting residential prices.

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Bibliographic Info

Paper provided by ESSEC Research Center, ESSEC Business School in its series ESSEC Working Papers with number DR 04006.

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Length: 24 pages
Date of creation: May 2004
Date of revision:
Handle: RePEc:ebg:essewp:dr-04006

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Postal: ESSEC Research Center, BP 105, 95021 Cergy, France
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Web page: http://www.essec.edu/
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Keywords: Real estate indexes; Repeat sales; Risk factors;

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References

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  1. David C. Ling & Andy Naranjo & M. Nimalendran, 2000. "Estimating Returns on Commercial Real Estate: A New Methodology Using Latent-Variable Models," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 28(2), pages 205-231.
  2. David Genesove & Christopher Mayer, 2001. "Loss Aversion and Seller Behavior: Evidence from the Housing Market," NBER Working Papers 8143, National Bureau of Economic Research, Inc.
  3. Brown, Gerald R & Matysiak, George A, 2000. "Sticky Valuations, Aggregation Effects, and Property Indices," The Journal of Real Estate Finance and Economics, Springer, vol. 20(1), pages 49-66, January.
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Citations

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Cited by:
  1. André Fourçans & Jonathan Benchimol, 2009. "Money in a DSGE framework with an application to the Euro Zone," Post-Print hal-00553495, HAL.
  2. Besancenot, Damien & Huynh, Kim & Vranceanu, Radu, 2009. "Desk rejection in an academic publication market model with matching frictions," ESSEC Working Papers DR 09008, ESSEC Research Center, ESSEC Business School.
  3. Giraud , Gaël & Renouard, Cécile, 2009. "Relational Capability: An Indicator of Collective Empowerment," ESSEC Working Papers DR 09012, ESSEC Research Center, ESSEC Business School.
  4. Naiditch, Claire & Vranceanu, Radu, 2009. "Remittances as a Social Status Signaling Device," ESSEC Working Papers DR 09015, ESSEC Research Center, ESSEC Business School.
  5. Nicolas Prat & Isabelle Comyn-Wattiau & Jacky Akoka, 2009. "Combining Objects with Rules to Represent Aggregation Knowledge in Data Warehouse and OLAP Systems," Post-Print hal-00551866, HAL.
  6. Marie-Léandre Gomez, 2009. "Knowledge Dynamics During Planning Practices," Post-Print hal-00554798, HAL.
  7. Marie-Léandre Gomez & Isabelle Bouty, 2009. "The Social Dimensions of Idea Work in Haute Cuisine: A Bourdieusian Perspective," Post-Print hal-00553515, HAL.
  8. Marie-Léandre Gomez & Isabelle Bouty, 2009. "Unpacking Knowing Integration: A Practice-based Study in Haute Cuisine," Post-Print hal-00554745, HAL.
  9. Jacques Potin, 2009. "The selection effect of two-way trade in the Melitz model: an alternative approach," Post-Print hal-00554724, HAL.

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