Age, Time, Vintage, and Price Indexes: Measuring the Depreciation Pattern of Houses

44 Pages Posted: 23 Feb 2016 Last revised: 24 Feb 2016

See all articles by Iqbal A. Syed

Iqbal A. Syed

UNSW Australia Business School, School of Economics

Jan de Haan

Delft University of Technology

Multiple version iconThere are 2 versions of this paper

Date Written: February 17, 2016

Abstract

Age, time and vintage are key determinants of house prices, yet they cannot be included together linearly or as dichotomous variables in hedonic regressions as construction time plus age of house = sale time. We introduce a method where the estimates of the age, time and vintage effects on prices are obtained in a flexible manner, without requiring us to specify a pre-determined functional form for either of these variables. Applying our method to Dutch data, we find that the estimated depreciation pattern over the life of houses does not follow the functional forms typically specified for the age of houses in hedonic regressions.

Keywords: Age-price profile, capital formation, hedonic regressions, GEKS index

JEL Classification: C43, E01, E31, R31

Suggested Citation

Syed, Iqbal A. and Haan, Jan de, Age, Time, Vintage, and Price Indexes: Measuring the Depreciation Pattern of Houses (February 17, 2016). UNSW Business School Research Paper No. 2016-01. Available at SSRN: https://ssrn.com/abstract=2733447 or http://dx.doi.org/10.2139/ssrn.2733447

Iqbal A. Syed (Contact Author)

UNSW Australia Business School, School of Economics ( email )

High Street
Sydney, NSW 2052
Australia

Jan de Haan

Delft University of Technology

Stevinweg 1
Stevinweg 1
Delft, 2628 CN
Netherlands

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