Developing a repeat sales property price index for residential properties in South Africa / H. Bester
In South Africa various financial institutions and independent vendors have developedresidential property valuation models to estimate the current value of historically tradedproperties. A natural extension to these models has been to develop historical property priceindices. In this dissertation, three of the four approaches to developing property price indiceswill be examined. Through back–testing and other statistical methods, the most accurate androbust approach will be determined. The four major approaches available are the meanvaluation per suburb, the median valuation per suburb, the repeat sales approach andhedonic regression. The mean valuation per suburb approach can be biased because ofoutliers in property prices. However, outliers in property prices will not influence the medianvaluation per suburb approach, but in cases where property values in a suburb have askewed distribution, the valuation amount could be distorted. Neither of the abovementioned shortcomings influences the repeat sales or the hedonic regression approach. Tofollow the hedonic regression approach, the characteristics of the property need to beknown. In South Africa, however, the available property data lacks detailed characteristics oftraded properties. This dissertation will therefore focus on the first three methods. The repeatsales approach measures the growth in property prices by applying a generalized linearmodel to properties that have traded more than once. This approach is only possible if thereis a representative amount of repeat sales able to fit a model. The focus of this project will beon the repeat sales approach, but all three the approaches discussed will be analysed toprove that the repeat sales approach is the most accurate in developing a property priceindex for properties in South Africa.
Year of publication: |
2010
|
---|---|
Authors: | Bester, Hermine |
Subject: | Repeat sales | Property price index | Erf key | Hedonic regression | Property valuation model | Heteroskedasticity | Data mart | Comparable sales | Property derivatives and smoothing | Herverkope | Eiendomsprys-indeks | Erfomskrywing | Hedonistiese regressie | Eiendomswaardasiemodel | Heteroskedastisiteit | Dataversameling | Vergelykbare verkope | Eiendomafgeleides en uitstryking |
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