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The Relationship Between Market Structure and Market Performance in Real Estate Based on Market Concentration Rate and Principal Component Analysis

In: Proceedings of the 24th International Symposium on Advancement of Construction Management and Real Estate

Author

Listed:
  • Hong Zhang

    (Tsinghua University)

  • Nan Guo

    (Tsinghua University)

Abstract

This paper mainly studies the relationship between real estate market concentration and market performance. Firstly, With the data of 2007–2017 in China, it uses Concentration Rate, the Herfindahl–Hirschman Indices as well as the Entropy Index to calculate the real estate market concentration. Secondly, referring to the Principal Component Analysis method, the Market Concentration Synthesis Index is synthesized to assess the degree of real estate market concentration. With the ROA measuring market performance, this paper finally analyzes the relationship between market concentration and market performance. The empirical results demonstrate that the real estate market concentration present a rising tendency during the period of 2007–2017 in general and the concentration of real estate market is negatively correlated with market performance. For every unit increased by the Market Concentration Synthesis Index, the ROA decreased by 0.194%.

Suggested Citation

  • Hong Zhang & Nan Guo, 2021. "The Relationship Between Market Structure and Market Performance in Real Estate Based on Market Concentration Rate and Principal Component Analysis," Springer Books, in: Gui Ye & Hongping Yuan & Jian Zuo (ed.), Proceedings of the 24th International Symposium on Advancement of Construction Management and Real Estate, pages 561-572, Springer.
    • Handle: RePEc:spr:sprchp:978-981-15-8892-1_40
    DOI: 10.1007/978-981-15-8892-1_40
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