Residential Property Prices in a Sub-Market of South Africa: Separating Real Growth from Attribute Growth

Stellenbosch Working Paper Series No. WP14/2008
 
Publication date: 2008
 
Author(s):
[protected email address] (Department of Economics, University of Stellenbosch and Duke University)
[protected email address] (Department of Economics, University of Stellenbosch)
 
Abstract:

This paper analyses the South African residential housing market using hedonic price theory. It builds and tests pooled OLS, fixed effects OLS, pseudo-panel and quantile regression models. The main findings are in agreement with most modern related literature. This paper highlights how house price growth rates have been calculated incorrectly due to the changing aggregate house sold every year. It calculates more accurate growth rates for the property market, yielding surprisingly different growth patterns from those originally thought. It illustrates that much of the recent house price growth was caused by attribute inflation rather than pure price inflation. It also shows that most of the pure inflation occurred at the bottom end of the market while most of the attribute inflation occurred at the top end of the market. Furthermore, it shows that house price determinants change across the house price distribution The data used was sourced from the Residential Property Price Ranger and covers 1930 house sales measured half yearly over three years; from 1 September 2004 to 31 August 2007. These sales were recorded in the towns of Stellenbosch, Somerset West, Strand and Gordon’s Bay.

 
JEL Classification:

C21, C23, R31

Keywords:

Hedonic pricing, Housing market, Growth rates

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BER Weekly

18 March 2019
Domestic economic data released last week indicates that growth momentum remained poor at the start of the year. In the domestic section, we discuss the latest reading for the RMB/BER Business Confidence Index (BCI), along with mining and manufacturing output for January. On the international front, we briefly discuss the latest Brexit developments,...

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