House Age, Price and Rent: Implications from Land-Structure Decomposition

Yangfei Xu (), Qinghua Zhang (), Siqi Zheng and Guozhong Zhu
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Yangfei Xu: Shanghai University of International Business and Economics
Qinghua Zhang: Peking University

The Journal of Real Estate Finance and Economics, 2018, vol. 56, issue 2, No 6, 303-324

Abstract: Abstract Big cities often witness land price outgrowing structure price. For such cities this paper derives two predictions regarding the dynamics between house prices, rent and structure age. First, older houses have a higher price growth rate than younger ones, even after controlling for location and other attributes; second, the age depreciation of house price, defined as the decline of house price with respect to house age, is slower than the similarly-defined age depreciation of rent. These hypotheses are supported by the micro-data on housing market in Beijing. These two inferences have implications for both real estate valuation and house price index construction.

Keywords: Land price; Structure price; House prices; Rent; Depreciation (search for similar items in EconPapers)
Date: 2018
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Citations: View citations in EconPapers (5)

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DOI: 10.1007/s11146-016-9596-6

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