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RESIDENTIAL PROPERTY PRICES IN A SUBMARKET OF SOUTH AFRICA: SEPARATING REAL RETURNS FROM ATTRIBUTE GROWTH
Author(s) -
Els Michael,
Von Fintel Dieter
Publication year - 2010
Publication title -
south african journal of economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.502
H-Index - 31
eISSN - 1813-6982
pISSN - 0038-2280
DOI - 10.1111/j.1813-6982.2010.01244.x
Subject(s) - inflation (cosmology) , economics , index (typography) , price index , residential property , space (punctuation) , econometrics , property (philosophy) , monetary economics , property market , financial economics , economic geography , finance , real estate , philosophy , physics , epistemology , world wide web , theoretical physics , computer science , linguistics
The South African residential housing market experienced high growth in the previous decade, in line with international trends. Traditional methods of documenting this trajectory use the average prices of only properties that are sold in given periods and regions. A critical assumption of these approaches is that houses remain homogenous across time and space. This paper constructs a micro‐level hedonic price index to account for changing attributes of heterogenous houses. It illustrates that returns may have been overstated, and that much of the growth recorded in this market is driven by attribute inflation, particularly in the high price segment.