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Residential Property Price Indexes for Tokyo

  • Diewert, Erwin
  • Shimizu, Chihiro

The paper uses hedonic regression techniques in order to decompose the price of a house into land and structure components using real estate sales data for Tokyo. In order to get sensible results, a nonlinear regression model using data that covered multiple time periods was used. Collinearity between the amount of land and structure in each residential property leads to inaccurate estimates for the land and structure value of a property. This collinearity problem was solved by using exogenous information on the rate of growth of construction costs in Tokyo in order to get useful constant quality subindexes for the price of land and structures separately.

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File URL: http://hermes-ir.lib.hit-u.ac.jp/rs/bitstream/10086/26024/1/wp003.pdf
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Paper provided by Institute of Economic Research, Hitotsubashi University in its series HIT-REFINED Working Paper Series with number 3.

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Length: 49 p.
Date of creation: Dec 2013
Date of revision:
Handle: RePEc:hit:remfce:3
Note: R21
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  1. Chihiron Shimizu & Kiyohiko G. Nishimura & Tsutomu Watanabe, 2010. "Housing Prices in Tokyo: A Comparison of Hedonic and Repeat Sales Measures," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), Justus-Liebig University Giessen, Department of Statistics and Economics, vol. 230(6), pages 792-813, December.
  2. Diewert, W. E., 1976. "Exact and superlative index numbers," Journal of Econometrics, Elsevier, vol. 4(2), pages 115-145, May.
  3. Ivancic, Lorraine & Erwin Diewert, W. & Fox, Kevin J., 2011. "Scanner data, time aggregation and the construction of price indexes," Journal of Econometrics, Elsevier, vol. 161(1), pages 24-35, March.
  4. McMillen, Daniel P., 2003. "The return of centralization to Chicago: using repeat sales to identify changes in house price distance gradients," Regional Science and Urban Economics, Elsevier, vol. 33(3), pages 287-304, May.
  5. Davis, Morris & Heathcote, Jonathan, 2005. "The Price and Quantity of Residential Land in the United States," CEPR Discussion Papers 5333, C.E.P.R. Discussion Papers.
  6. Clapp, John M., 1980. "The elasticity of substitution for land: The effects of measurement errors," Journal of Urban Economics, Elsevier, vol. 8(2), pages 255-263, September.
  7. Schwann, Gregory M, 1998. "A Real Estate Price Index for Thin Markets," The Journal of Real Estate Finance and Economics, Springer, vol. 16(3), pages 269-87, May.
  8. W. Erwin Diewert & John S. Greenlees & Charles R. Hulten, 2009. "Price Index Concepts and Measurement," NBER Books, National Bureau of Economic Research, Inc, number diew08-1, May.
  9. W. Erwin DIEWERT & Jan de HAAN & Rens HENDRIKS, 2011. "The Decomposition of a House Price Index into Land and Structures Components: A Hedonic Regression Approach," The Valuation Journal, National Association of Romanian Valuers, vol. 6(1), pages 58-105.
  10. Thorsnes, Paul, 1997. "Consistent Estimates of the Elasticity of Substitution between Land and Non-Land Inputs in the Production of Housing," Journal of Urban Economics, Elsevier, vol. 42(1), pages 98-108, July.
  11. Raphael W. Bostic & Stanley D. Longhofer & Christian L. Redfearn, 2007. "Land Leverage: Decomposing Home Price Dynamics," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 35(2), pages 183-208, 06.
  12. Taltavull Paloma & Kauko Tom & d'Amato Maurizio, 2009. "Mass Appraisal Methods: An International Perspective for Property Valuers," International Journal of Strategic Property Management, De Gruyter Open, vol. 13(4), pages 359-364, December.
  13. Marc K. Francke & Gerjan A. Vos, 2004. "The Hierarchical Trend Model for Property Valuation and Local Price Indices," The Journal of Real Estate Finance and Economics, Springer, vol. 28(2_3), pages 179-208, 03.
  14. Chihiro Shimizu & Kiyohiko Nishimura, 2007. "Pricing Structure in Tokyo Metropolitan Land Markets and its Structural Changes: Pre-bubble, Bubble, and Post-bubble Periods," The Journal of Real Estate Finance and Economics, Springer, vol. 35(4), pages 475-496, November.
  15. Eurostat, 2013. "Handbook on Residential Property Prices Indices," World Bank Publications, The World Bank, number 17280, June.
  16. Rosen, Sherwin, 1974. "Hedonic Prices and Implicit Markets: Product Differentiation in Pure Competition," Journal of Political Economy, University of Chicago Press, vol. 82(1), pages 34-55, Jan.-Feb..
  17. Gyourko, Joseph & Saiz, Albert, 2004. "Reinvestment in the housing stock: the role of construction costs and the supply side," Journal of Urban Economics, Elsevier, vol. 55(2), pages 238-256, March.
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