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Age, Time, Vintage, and Price Indexes: Measuring the Depreciation Pattern of Houses

Author

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  • Iqbal Syed

    (School of Economics and CAER, UNSW Business School, UNSW)

  • Jan de Haan

    (Statistics Netherlands and Delft University of Technology, The Netherlands)

Abstract

Age, time and vintage are key determinants of house prices, yet they cannot be included together linearly or as dichotomous variables in hedonic regressions as construction time + age of house = sale time. We introduce a method where the estimates of the age, time and vintage effects on prices are obtained in a flexible manner, without requiring us to specify a pre-determined functional form for either of these variables. Applying our method to Dutch data, we find that the estimated depreciation pattern over the life of houses does not follow the functional forms typically specified for the age of houses in hedonic regressions.

Suggested Citation

  • Iqbal Syed & Jan de Haan, 2016. "Age, Time, Vintage, and Price Indexes: Measuring the Depreciation Pattern of Houses," Discussion Papers 2016-01, School of Economics, The University of New South Wales.
  • Handle: RePEc:swe:wpaper:2016-01
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    File URL: http://research.economics.unsw.edu.au/RePEc/papers/2016-01.pdf
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    More about this item

    Keywords

    Age-price profile; capital formation; hedonic regressions; GEKS index;
    All these keywords.

    JEL classification:

    • C43 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Index Numbers and Aggregation
    • E01 - Macroeconomics and Monetary Economics - - General - - - Measurement and Data on National Income and Product Accounts and Wealth; Environmental Accounts
    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • R31 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Housing Supply and Markets

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