Estimating Estate-Specific Price-to-Rent Ratios in Shanghai and Shenzhen: A Bayesian Approach
The price-to-rent ratio, a common yardstick for the value of housing, is difficult to estimatewhen rental properties are poor substitutes of owner-occupied homes. In this study weestimate price-to-rent ratios of residential properties in two major cities in China, where urbanhigh-rises (estates) comprise both rental and owner-occupied units. We conduct Bayesianinference on estate-specific parameters, using information of rental units to elicit priors of theunobserved rents of units sold in the same estate. We find that the price-to-rent ratios tendto be higher for low-end properties. We discuss economic explanations for the phenomenonand the policy implications.
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- Charles Himmelberg & Christopher Mayer & Todd Sinai, 2005.
"Assessing High House Prices: Bubbles, Fundamentals, and Misperceptions,"
NBER Working Papers
11643, National Bureau of Economic Research, Inc.
- Charles Himmelberg & Christopher Mayer & Todd Sinai, 2005. "Assessing High House Prices: Bubbles, Fundamentals and Misperceptions," Journal of Economic Perspectives, American Economic Association, vol. 19(4), pages 67-92, Fall.
- Charles P. Himmelberg & Christopher J. Mayer & Todd Sinai, 2005. "Assessing high house prices: bubbles, fundamentals, and misperceptions," Staff Reports 218, Federal Reserve Bank of New York.
- Dufour, Jean-Marie & Jasiak, Joann, 2001. "Finite Sample Limited Information Inference Methods for Structural Equations and Models with Generated Regressors," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 42(3), pages 815-43, August.
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