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On the Stability of the Implicit Prices of Housing Attributes: A Dynamic Theory and Some Evidence

Author

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  • Charles Ka Yui Leung

    (Department of Economics and Finance, City University of Hong Kong, Kowloon Tong, Hong Kong)

  • Kelvin Siu Kei Wong

    (Department of Real Estate and Construction, The University of Hong Kong, Pokfulam, Hong Kong)

  • Patrick Wai Yin Cheung

    (Department of Economics and Finance, City University of Hong Kong, Kowloon Tong, Hong Kong)

Abstract

Given the dramatic fluctuations in aggregate housing prices, this paper attempts to examine whether the implicit prices of different housing attributes are “stable.” Theoretically, this paper provides perhaps the first dynamic, general equilibrium model in which housing attributes’ implicit prices fluctuate. Empirically, this paper models the time paths of different implicit prices as auto-regressive processes by employing a hedonic pricing model on a large set of housing transaction data over a relatively long period of time. An endogenous structural break test is then performed. Except for a few attributes, structural breaks are not detected. Directions for future research are discussed.

Suggested Citation

  • Charles Ka Yui Leung & Kelvin Siu Kei Wong & Patrick Wai Yin Cheung, 2007. "On the Stability of the Implicit Prices of Housing Attributes: A Dynamic Theory and Some Evidence," International Real Estate Review, Global Social Science Institute, vol. 10(2), pages 66-93.
    • Handle: RePEc:ire:issued:v:10:n:02:2007:p:66-93
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    References listed on IDEAS

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    Cited by:

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    2. Charles Ka Yui Leung & Patrick Wai Yin Cheung & Erica Jiajia Ding, 2008. "Intra-metropolitan Office Price and Trading Volume Dynamics: Evidence from Hong Kong," International Real Estate Review, Global Social Science Institute, vol. 11(2), pages 47-74.
    3. Charles Ka Yui Leung & Patrick Wai Yin Cheung & Edward Chi Ho Tang, 2013. "Financial Crisis and the Co-movements of Housing Sub-markets: Do relationships change after a crisis?," International Real Estate Review, Global Social Science Institute, vol. 16(1), pages 68-118.
    4. Charles Ka Yui Leung & Edward Chi Ho Tang, 2015. "Speculating China Economic Growth through Hong Kong? Evidence from Stock Market IPOs and Real Estate Markets," International Real Estate Review, Global Social Science Institute, vol. 18(1), pages 45-87.
    5. Ka Shing Cheung & Chung Yim Yiu & Chuyi Xiong, 2021. "Housing Market in the Time of Pandemic: A Price Gradient Analysis from the COVID-19 Epicentre in China," JRFM, MDPI, vol. 14(3), pages 1-17, March.

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    More about this item

    Keywords

    hedonic pricing; structural break; evolution of valuation; housing attributes;
    All these keywords.

    JEL classification:

    • L85 - Industrial Organization - - Industry Studies: Services - - - Real Estate Services

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