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

21 Pages Posted: 21 Nov 2016

See all articles by Iqbal A. Syed

Iqbal A. Syed

UNSW Australia Business School, School of Economics

Jan De Haan

Statistics Netherlands

Multiple version iconThere are 2 versions of this paper

Date Written: January 2017

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 + 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 any 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.

JEL Classification: C43, E01, E31, R31

Suggested Citation

Syed, Iqbal A. and De Haan, Jan, Age, Time, Vintage, and Price Indexes: Measuring the Depreciation Pattern of Houses (January 2017). Economic Inquiry, Vol. 55, Issue 1, pp. 580-600, 2017. Available at SSRN: https://ssrn.com/abstract=2872451 or http://dx.doi.org/10.1111/ecin.12383

Iqbal A. Syed (Contact Author)

UNSW Australia Business School, School of Economics ( email )

High Street
Sydney, NSW 2052
Australia

Jan De Haan

Statistics Netherlands ( email )

Henri Faasdreef 312
The Hague, 2492 JP
Netherlands

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