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Measuring the Cost of Imperfect Information in the Tokyo Housing Market

Chihiro Shimizu, Kiyohiko G. Nishimura and Yasushi Asami
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Chihiro Shimizu: RECRUIT Real Estate Research Institute
Kiyohiko G. Nishimura: Faculty of Economics, University of Tokyo

No CIRJE-F-238, CIRJE F-Series from CIRJE, Faculty of Economics, University of Tokyo

Abstract: The cost of imperfect information is estimated in the real estate market of resale condominiums in central Tokyo by using a new, comprehensive data set of resale condominium transactions. The results suggest a substantial cost. Specifically, if information were perfectly available and marketing time is null, sellers would get benefits of 10.58% based on average interest rate, 31.28% on gross rent and 22.59% on net rent, against imputed rent of their property. Buyers spend 1,042,000 Yen on search activities for one transaction, which would be saved if information were prefect. This cost amounts to be equivalent to 13.2% of buyers' average annual income.

New Economics Papers: this item is included in nep-mic and nep-ure
Date: 2003-08
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Handle: RePEc:tky:fseres:2003cf238