IDEAS home Printed from https://ideas.repec.org/p/ubc/bricol/erwin_diewert-2013-16.html
   My bibliography  Save this paper

Residential Property Price Indexes for Tokyo

Author

Listed:
  • Diewert, Erwin
  • Shimizu, Chihiro

Abstract

The paper uses hedonic regression techniques in order to decompose the price of a house into land and structure components using real estate sales data for Tokyo. In order to get sensible results, a nonlinear regression model using data that covered multiple time periods was used. Collinearity between the amount of land and structure in each residential property leads to inaccurate estimates for the land and structure value of a property. This collinearity problem was solved by using exogenous information on the rate of growth of construction costs in Tokyo in order to get useful constant quality subindexes for the price of land and structures separately.

Suggested Citation

  • Diewert, Erwin & Shimizu, Chihiro, 2013. "Residential Property Price Indexes for Tokyo," Economics working papers erwin_diewert-2013-16, Vancouver School of Economics, revised 11 Apr 2013.
    • Handle: RePEc:ubc:bricol:erwin_diewert-2013-16
    as

    Download full text from publisher

    File URL: http://faculty.arts.ubc.ca/ediewert/dp1307.pdf
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Ivancic, Lorraine & Erwin Diewert, W. & Fox, Kevin J., 2011. "Scanner data, time aggregation and the construction of price indexes," Journal of Econometrics, Elsevier, vol. 161(1), pages 24-35, March.
    2. W. Erwin Diewert & Saeed Heravi & Mick Silver, 2009. "Hedonic Imputation versus Time Dummy Hedonic Indexes," NBER Chapters, in: Price Index Concepts and Measurement, pages 161-196, National Bureau of Economic Research, Inc.
    3. Gyourko, Joseph & Saiz, Albert, 2004. "Reinvestment in the housing stock: the role of construction costs and the supply side," Journal of Urban Economics, Elsevier, vol. 55(2), pages 238-256, March.
    4. W. Erwin DIEWERT & Jan de HAAN & Rens HENDRIKS, 2011. "The Decomposition of a House Price Index into Land and Structures Components: A Hedonic Regression Approach," The Valuation Journal, The National Association of Authorized Romanian Valuers, vol. 6(1), pages 58-105.
    5. Clapp, John M., 1980. "The elasticity of substitution for land: The effects of measurement errors," Journal of Urban Economics, Elsevier, vol. 8(2), pages 255-263, September.
    6. McMillen, Daniel P., 2003. "The return of centralization to Chicago: using repeat sales to identify changes in house price distance gradients," Regional Science and Urban Economics, Elsevier, vol. 33(3), pages 287-304, May.
    7. Thorsnes, Paul, 1997. "Consistent Estimates of the Elasticity of Substitution between Land and Non-Land Inputs in the Production of Housing," Journal of Urban Economics, Elsevier, vol. 42(1), pages 98-108, July.
    8. Davis, Morris A. & Heathcote, Jonathan, 2007. "The price and quantity of residential land in the United States," Journal of Monetary Economics, Elsevier, vol. 54(8), pages 2595-2620, November.
    9. Marc K. Francke & Gerjan A. Vos, 2004. "The Hierarchical Trend Model for Property Valuation and Local Price Indices," The Journal of Real Estate Finance and Economics, Springer, vol. 28(2_3), pages 179-208, March.
    10. Rosen, Sherwin, 1974. "Hedonic Prices and Implicit Markets: Product Differentiation in Pure Competition," Journal of Political Economy, University of Chicago Press, vol. 82(1), pages 34-55, Jan.-Feb..
    11. Eurostat, 2013. "Handbook on Residential Property Prices Indices," World Bank Publications - Books, The World Bank Group, number 17280.
    12. Diewert, W. E., 1976. "Exact and superlative index numbers," Journal of Econometrics, Elsevier, vol. 4(2), pages 115-145, May.
    13. Chihiro Shimizu & Kiyohiko Nishimura, 2007. "Pricing Structure in Tokyo Metropolitan Land Markets and its Structural Changes: Pre-bubble, Bubble, and Post-bubble Periods," The Journal of Real Estate Finance and Economics, Springer, vol. 35(4), pages 475-496, November.
    14. de Haan, Jan & van der Grient, Heymerik A., 2011. "Eliminating chain drift in price indexes based on scanner data," Journal of Econometrics, Elsevier, vol. 161(1), pages 36-46, March.
    15. Schwann, Gregory M, 1998. "A Real Estate Price Index for Thin Markets," The Journal of Real Estate Finance and Economics, Springer, vol. 16(3), pages 269-287, May.
    16. Raphael W. Bostic & Stanley D. Longhofer & Christian L. Redfearn, 2007. "Land Leverage: Decomposing Home Price Dynamics," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 35(2), pages 183-208, June.
    17. Shimizu Chihiro & Nishimura Kiyohiko G. & Watanabe Tsutomu, 2010. "Housing Prices in Tokyo: A Comparison of Hedonic and Repeat Sales Measures," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), De Gruyter, vol. 230(6), pages 792-813, December.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Diewert, W. Erwin & Shimizu, Chihiro, 2016. "Hedonic regression models for Tokyo condominium sales," Regional Science and Urban Economics, Elsevier, vol. 60(C), pages 300-315.
    2. Shimizu, Chihiro & Imai, Satoshi & Diewert, Erwin, 2016. "Alternative Approaches to Housing Services and Japanese CPI: -Bias from Nominal Rigidity of Rents-," HIT-REFINED Working Paper Series 35, Institute of Economic Research, Hitotsubashi University.
    3. Erwin Diewert & Chihiro Shimizu, 2017. "Alternative Approaches to Commercial Property Price Indexes for Tokyo," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 63(3), pages 492-519, September.
    4. Robert J. Hill & Alicia N. Rambaldi & Michael Scholz, 2021. "Higher frequency hedonic property price indices: a state-space approach," Empirical Economics, Springer, vol. 61(1), pages 417-441, July.
    5. Tokuo Iwaisako & Arito Ono & Amane Saito & Hidenobu Tokuda, 2022. "Disentangling the effect of home ownership on household stockholdings: Evidence from Japanese micro data," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 50(1), pages 268-295, March.
    6. Suzuki, Masatomo & Asami, Yasushi & Shimizu, Chihiro, 2021. "Housing rent rigidity under downward pressure: Unit-level longitudinal evidence from Tokyo," Journal of Housing Economics, Elsevier, vol. 52(C).
    7. Suzuki, Masatomo & Shimizu, Chihiro, 2024. "Obsolete housing equipment, weak renovation, and rapid depreciation of Japanese condominiums," Journal of the Japanese and International Economies, Elsevier, vol. 71(C).
    8. Reusens, Peter & Vastmans, Frank & Damen, Sven, 2023. "A new framework to disentangle the impact of changes in dwelling characteristics on house price indices," Economic Modelling, Elsevier, vol. 123(C).
    9. W. Erwin Diewert & Kiyohiko G. Nishimura & Chihiro Shimizu & Tsutomu Watanabe, 2020. "New Estimates for the Price of Housing in the Japanese CPI," Advances in Japanese Business and Economics, in: Property Price Index, chapter 0, pages 299-323, Springer.
    10. Chihiro Shimizu & Erwin Diewert, 2023. "Scanner Data, Product Churn and Quality Adjustment," Working Papers e185, Tokyo Center for Economic Research.
    11. W. Erwin Diewert & Kevin J. Fox & Chihiro Shimizu, 2016. "Commercial Property Price Indexes And The System Of National Accounts," Journal of Economic Surveys, Wiley Blackwell, vol. 30(5), pages 913-943, December.
    12. Alicia N. Rambaldi & Ryan R. J. McAllister & Cameron S. Fletcher, 2015. "Decoupling land values in residential property prices: smoothing methods for hedonic imputed price indices," Discussion Papers Series 549, School of Economics, University of Queensland, Australia.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Diewert, W. Erwin & Nishimura , Kiyohiko & Shimizu, Chihiro & Watanabe, Tsutomu, 2014. "Residential Property Price Indexes for Japan: An Outline of the Japanese Official RPPI," Economics working papers erwin_diewert-2014-17, Vancouver School of Economics, revised 27 Mar 2014.
    2. W. Erwin Diewert & Chihiro Shimizu, 2022. "Residential Property Price Indexes: Spatial Coordinates Versus Neighborhood Dummy Variables," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 68(3), pages 770-796, September.
    3. Burnett-Isaacs,, Kate & Diewert, Erwin & Huang, Ning, 2017. "Alternative Approaches for Resale Housing Price Indexes," Microeconomics.ca working papers erwin_diewert-2017-6, Vancouver School of Economics, revised 08 May 2017.
    4. Erwin Diewert & Chihiro Shimizu, 2020. "Alternative Land‐Price Indexes for Commercial Properties in Tokyo," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 66(4), pages 784-824, December.
    5. W. Erwin Diewert & Kiyohiko G. Nishimura & Chihiro Shimizu & Tsutomu Watanabe, 2020. "Measuring the Services of Durables and Owner Occupied Housing," Advances in Japanese Business and Economics, in: Property Price Index, chapter 0, pages 223-298, Springer.
    6. Diewert, W. Erwin & Shimizu, Chihiro, 2016. "Hedonic regression models for Tokyo condominium sales," Regional Science and Urban Economics, Elsevier, vol. 60(C), pages 300-315.
    7. W. Erwin Diewert & Kiyohiko G. Nishimura & Chihiro Shimizu & Tsutomu Watanabe, 2020. "The System of National Accounts and Alternative Approaches to the Construction of Commercial Property Price Indexes," Advances in Japanese Business and Economics, in: Property Price Index, chapter 0, pages 181-219, Springer.
    8. Mick Silver, 2016. "How to Better Measure Hedonic Residential Property Price Indexes," IMF Working Papers 2016/213, International Monetary Fund.
    9. Erwin Diewert & Chihiro Shimizu, 2017. "Alternative Approaches to Commercial Property Price Indexes for Tokyo," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 63(3), pages 492-519, September.
    10. Adam Gorajek, 2018. "Econometric Perspectives on Economic Measurement," RBA Research Discussion Papers rdp2018-08, Reserve Bank of Australia.
    11. Diewert, Erwin, 2019. "Quality Adjustment and Hedonics: A Unified Approach," Microeconomics.ca working papers erwin_diewert-2019-2, Vancouver School of Economics, revised 14 Mar 2019.
    12. Iqbal A. Syed & Jan De Haan, 2017. "Age, Time, Vintage, And Price Indexes: Measuring The Depreciation Pattern Of Houses," Economic Inquiry, Western Economic Association International, vol. 55(1), pages 580-600, January.
    13. Shimizu, Chihiro & Karato, Koji, 2016. "Property Price Index Theory and Estimation: A Survey," HIT-REFINED Working Paper Series 34, Institute of Economic Research, Hitotsubashi University.
    14. Diewert, W. Erwin & Fox, Kevin J., 2016. "Kevin J. Fox Interview of W. Erwin Diewert," Microeconomics.ca working papers erwin_diewert-2016-6, Vancouver School of Economics, revised 02 Jun 2016.
    15. GLUMAC Brano & HERRERA-GOMEZ Marcos & LICHERON Julien, 2018. "A residential land price index for Luxembourg: Dealing with the spatial dimension," LISER Working Paper Series 2018-07, Luxembourg Institute of Socio-Economic Research (LISER).
    16. Robert J. Hill & Alicia N. Rambaldi & Michael Scholz, 2021. "Higher frequency hedonic property price indices: a state-space approach," Empirical Economics, Springer, vol. 61(1), pages 417-441, July.
    17. Gong Yunlong & de Haan Jan, 2018. "Accounting for Spatial Variation of Land Prices in Hedonic Imputation House Price Indices: a Semi-Parametric Approach," Journal of Official Statistics, Sciendo, vol. 34(3), pages 695-720, September.
    18. David Geltner & Anil Kumar & Alex M. Van de Minne, 2020. "Riskiness of Real Estate Development: A Perspective from Urban Economics and Option Value Theory," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 48(2), pages 406-445, June.
    19. Yi Huang & Geoffrey Hewings, 2021. "More Reliable Land Price Index: Is There a Slope Effect?," Land, MDPI, vol. 10(3), pages 1-24, March.
    20. Diewert, W. Erwin & Fox, Kevin J., 2017. "Substitution Bias in Multilateral Methods for CPI Construction using Scanner Data," Microeconomics.ca working papers erwin_diewert-2017-3, Vancouver School of Economics, revised 23 Mar 2017.

    More about this item

    Keywords

    House price indexes; land and structure components; time dummy hedonic regressions; spline functions; flexible functional forms; Fisher ideal indexes.;
    All these keywords.

    JEL classification:

    • C2 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables
    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • C43 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Index Numbers and Aggregation
    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • R21 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Housing Demand

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ubc:bricol:erwin_diewert-2013-16. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Maureen Chin (email available below). General contact details of provider: http://www.economics.ubc.ca/ .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.