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Disentanglement of Age, Time and Vintage Effects on Housing Price by Forward Contracts

29 Pages Posted: 12 Sep 2008  

Chung Yim Edward Yiu

Chinese University of Hong Kong - Department of Geography and Resource Management

Date Written: September 10, 2008

Abstract

Age, time and vintage effects are exact collinear, so their effects cannot be disentangled in regression analyses. Suggestions have been put forward to deal with this problem, but in vain. Since the problem of exact collinearity requires external information to solve, any manipulation of the existing data is doomed to fail. This paper circumvents the problem fundamentally by exploiting housing forward contracts, which can estimate vintage effects in housing by using a-priori information in pre-occupation sales (i.e. forward contracts). An empirical illustration of a housing estate in Hong Kong is provided.

Keywords: Vintage, Exact Collinearity, Forward Contracts

JEL Classification: C33, C81, R21

Suggested Citation

Yiu, Chung Yim Edward, Disentanglement of Age, Time and Vintage Effects on Housing Price by Forward Contracts (September 10, 2008). Available at SSRN: https://ssrn.com/abstract=1266444 or http://dx.doi.org/10.2139/ssrn.1266444

Chung Yim Edward Yiu (Contact Author)

Chinese University of Hong Kong - Department of Geography and Resource Management ( email )

Shatin
the New Territories
Hong Kong
Hong Kong

HOME PAGE: http://www.grm.cuhk.edu.hk/eng/people/ppl/fac_YiuEdward.html

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