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Controversy over the Market Value of Real Property as an Institution

Author

Listed:
  • Andrzej Reszke

    (Uniwersytet Gdański)

  • Lucjan Czechowski

    (Uniwersytet Gdański)

Abstract

The standard theory of the market value of real property, agreed and accepted by the International Valuation Standards Committee (IVSC) is based on neoclassical assumptions of perfect competition. In fact, conditions such as the availability of players for free and complete market information are never satisfied. This situation is particularly visible in the real estate markets. This leads to considerable variation of transaction prices even on property of similar type, which leads to the formation of transaction costs related to uncertainty and the lack of trust among market participants. A look at the market value and the process of its valuation as an institution within the meaning of the so-called new institutional economics (NIE) can promote solving these problems. However, this requires undertaking targeted research to define and refine the principles of valuation.

Suggested Citation

  • Andrzej Reszke & Lucjan Czechowski, 2017. "Controversy over the Market Value of Real Property as an Institution," World of Real Estate Journal (Swiat Nieruchomosci), Fundacja Uniwersytetu Ekonomicznego w Krakowie, issue 99, pages 5-8, March.
    • Handle: RePEc:kra:journl:y:2017:i:99:p:5-8
    DOI: 10.14659/worej.2017.99.01
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    More about this item

    Keywords

    real estates; market value; new institutional economics;
    All these keywords.

    JEL classification:

    • R30 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - General
    • D46 - Microeconomics - - Market Structure, Pricing, and Design - - - Value Theory
    • B52 - Schools of Economic Thought and Methodology - - Current Heterodox Approaches - - - Historical; Institutional; Evolutionary; Modern Monetary Theory;

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