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Residential Property Prices in a Sub-Market of South Africa: Separating Real Growth from Attribute Growth

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Author Info
Michael Els () (Department of Economics, University of Stellenbosch and Duke University)
Dieter von Fintel () (Department of Economics, University of Stellenbosch)

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Abstract

This paper analyses the South African residential housing market using hedonic price theory. It builds and tests pooled OLS, fixed effects OLS, pseudo-panel and quantile regression models. The main findings are in agreement with most modern related literature. This paper highlights how house price growth rates have been calculated incorrectly due to the changing aggregate house sold every year. It calculates more accurate growth rates for the property market, yielding surprisingly different growth patterns from those originally thought. It illustrates that much of the recent house price growth was caused by attribute inflation rather than pure price inflation. It also shows that most of the pure inflation occurred at the bottom end of the market while most of the attribute inflation occurred at the top end of the market. Furthermore, it shows that house price determinants change across the house price distribution The data used was sourced from the Residential Property Price Ranger and covers 1930 house sales measured half yearly over three years; from 1 September 2004 to 31 August 2007. These sales were recorded in the towns of Stellenbosch, Somerset West, Strand and Gordon’s Bay.

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File URL: http://www.ekon.sun.ac.za/wpapers/2008/wp142008/wp-14-2008.pdf
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File Function: First version, 2008
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Publisher Info
Paper provided by Stellenbosch University, Department of Economics in its series Working Papers with number 14/2008.

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Date of creation: 2008
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Handle: RePEc:sza:wpaper:wpapers62

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Related research
Keywords: Hedonic pricing; Housing market; Growth rates;

Find related papers by JEL classification:
C21 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models
C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data
R31 - Urban, Rural, and Regional Economics - - Production Analysis and Firm Location - - - Housing Supply and Markets

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This page was last updated on 2009-11-28.

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