Open AccessInternational Real Estate Review
Author(s) -
Su Han Chan,
Ко Wang,
Jing Yang
Publication year - 2003
Publication title -
journal of the asian real estate society
Language(s) - English
Resource type - Journals
ISSN - 1029-6131
DOI - 10.53383/100048
Subject(s) - real estate , economics , consumption (sociology) , property (philosophy) , variance (accounting) , microeconomics , econometrics , monetary economics , financial economics , finance , social science , philosophy , accounting , epistemology , sociology
Conventional wisdom tells us that the price level of properties should be supported by the rent they receive. This paper examines the pricing factors of properties by analyzing how individuals allocate their income to housing consumption and other goods, which in turn become the rent (or implicit rent) to support property values. Our model’s results can explain several puzzling observations in property markets, including why the variance of property appreciation rates is much higher than that of income growth rates in the same area.