Pub Date : 2022-09-16DOI: 10.1108/jerer-03-2020-0013
M. White, D. Papastamos
PurposeThis paper examines the price setting behaviour over time and space in the Athens residential market. In periods of house price inflation asking prices are often based upon the last observed highest selling price achieved for a similar property in the same micro-location. However, in a falling market, prices may be rigid downwards and less sensitive to the most recent transaction prices, weakening spatial effects. Furthermore, the paper considers whether future price expectations affect price setting behaviour.Design/methodology/approachThe paper employs a dataset of approximately 24,500 property values from 2007 until 2014 in Athens incorporating characteristics and locational variables. The authors begin by estimating a baseline hedonic price model using property characteristics, neighbourhood amenities and location effects. Following this, a spatio-temporal autoregressive (STAR) model is estimated. Running separate models, the authors account for spatial dependence from historic valuations, contemporaneous peer effects and expectations effects.FindingsThe initial STAR model shows significant spatial and temporal effects, the former remaining important in a falling market contrasting with previous literature findings. In the second STAR model, whilst past sales effects remain significant although smaller, contemporaneous and price expectations effects are also found to be significant, the latter capturing anchoring and slow adjustment heuristics in price setting behaviour.Research limitations/implicationsAs valuations used in the database are based upon comparable sales, then in the recessionary periods covered in the dataset, finding comparables may have become more difficult, and hence this, in turn, may have impacted on valuation accuracy.Practical implicationsIn addition to past effects, contemporaneous transactions and expected future values need to be taken in consideration in analysing spatial interactions in housing markets. These factors will influence housing markets in different cities and countries.Social implicationsThe information content of property valuations should more carefully consider the relative importance of different components of asking prices.Originality/valueThis is the first paper to use transactions data over a period of falling house prices in Athens and to consider current and future values in addition to past values in a spatio-temporal context.
{"title":"Buyer behaviour and price expectations: a spatial analysis of the Athens residential market","authors":"M. White, D. Papastamos","doi":"10.1108/jerer-03-2020-0013","DOIUrl":"https://doi.org/10.1108/jerer-03-2020-0013","url":null,"abstract":"PurposeThis paper examines the price setting behaviour over time and space in the Athens residential market. In periods of house price inflation asking prices are often based upon the last observed highest selling price achieved for a similar property in the same micro-location. However, in a falling market, prices may be rigid downwards and less sensitive to the most recent transaction prices, weakening spatial effects. Furthermore, the paper considers whether future price expectations affect price setting behaviour.Design/methodology/approachThe paper employs a dataset of approximately 24,500 property values from 2007 until 2014 in Athens incorporating characteristics and locational variables. The authors begin by estimating a baseline hedonic price model using property characteristics, neighbourhood amenities and location effects. Following this, a spatio-temporal autoregressive (STAR) model is estimated. Running separate models, the authors account for spatial dependence from historic valuations, contemporaneous peer effects and expectations effects.FindingsThe initial STAR model shows significant spatial and temporal effects, the former remaining important in a falling market contrasting with previous literature findings. In the second STAR model, whilst past sales effects remain significant although smaller, contemporaneous and price expectations effects are also found to be significant, the latter capturing anchoring and slow adjustment heuristics in price setting behaviour.Research limitations/implicationsAs valuations used in the database are based upon comparable sales, then in the recessionary periods covered in the dataset, finding comparables may have become more difficult, and hence this, in turn, may have impacted on valuation accuracy.Practical implicationsIn addition to past effects, contemporaneous transactions and expected future values need to be taken in consideration in analysing spatial interactions in housing markets. These factors will influence housing markets in different cities and countries.Social implicationsThe information content of property valuations should more carefully consider the relative importance of different components of asking prices.Originality/valueThis is the first paper to use transactions data over a period of falling house prices in Athens and to consider current and future values in addition to past values in a spatio-temporal context.","PeriodicalId":44570,"journal":{"name":"Journal of European Real Estate Research","volume":null,"pages":null},"PeriodicalIF":1.3,"publicationDate":"2022-09-16","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"78833377","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2022-08-22DOI: 10.1108/jerer-04-2022-0012
G. Wiejak-Roy
PurposeIn light of the ever-growing complexity of real estate transactions, the need for vendors and buyers to better understand the role of vendor due diligence (VDD) is imperative. The purpose of this paper is twofold: firstly, it provides a detailed literature review regarding the role of VDD from both the vendor's and buyers' perspectives. Secondly, it analyses the value of VDD over and above the buyer's due diligence (BDD) in real estate transactions by proposing a theoretical model involving two-stage auctions.Design/methodology/approachReal-world examples from the industry are used as a motivation behind listing a set of practical questions. A theoretical construct is built to approximate the real estate environment under study. The construct is then studied from a game-theoretic perspective to obtain theoretical answers to the questions. These answers are then used to shape recommendations for the relevant industry and beyond.FindingsThe model suggested accommodates the feature that even though the VDD is broadly increasing informational efficiency in the market, its value is limited and sometimes harmful when the vendors have a sound prior understanding of their assets and the buyers' pre-transaction information about the asset is already high.Originality/valueThough the real estate market is considered here, the theoretical model we propose is applicable to any other complex asset transaction decision that supports endogenous information disclosure considerations using VDD.
{"title":"Strategic vendor due diligence in real estate transactions","authors":"G. Wiejak-Roy","doi":"10.1108/jerer-04-2022-0012","DOIUrl":"https://doi.org/10.1108/jerer-04-2022-0012","url":null,"abstract":"PurposeIn light of the ever-growing complexity of real estate transactions, the need for vendors and buyers to better understand the role of vendor due diligence (VDD) is imperative. The purpose of this paper is twofold: firstly, it provides a detailed literature review regarding the role of VDD from both the vendor's and buyers' perspectives. Secondly, it analyses the value of VDD over and above the buyer's due diligence (BDD) in real estate transactions by proposing a theoretical model involving two-stage auctions.Design/methodology/approachReal-world examples from the industry are used as a motivation behind listing a set of practical questions. A theoretical construct is built to approximate the real estate environment under study. The construct is then studied from a game-theoretic perspective to obtain theoretical answers to the questions. These answers are then used to shape recommendations for the relevant industry and beyond.FindingsThe model suggested accommodates the feature that even though the VDD is broadly increasing informational efficiency in the market, its value is limited and sometimes harmful when the vendors have a sound prior understanding of their assets and the buyers' pre-transaction information about the asset is already high.Originality/valueThough the real estate market is considered here, the theoretical model we propose is applicable to any other complex asset transaction decision that supports endogenous information disclosure considerations using VDD.","PeriodicalId":44570,"journal":{"name":"Journal of European Real Estate Research","volume":null,"pages":null},"PeriodicalIF":1.3,"publicationDate":"2022-08-22","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"81654828","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2022-08-05DOI: 10.1108/jerer-11-2021-0051
Philippos Nikiforou, T. Dimopoulos, P. Sivitanides
PurposeThe purpose of this study is to investigate how the degree of overpricing (DOP) and other variables are associated with the time on the market (TOM) and the final selling price (SP) for residential properties in the Paphos urban area.Design/methodology/approachThe hedonic pricing model was used to examine the association of TOM and SP with various factors. The association of the independent variable of DOP and other independent variables with the two dependent variables of TOM and SP were investigated via ordinary least squares (OLS) regression models. In the first set of models the dependent variable was TOM and in the second set of models the dependent variable was SP. A sample of N = 538 completed transactions from Q1 2008 to Q2 2019 was used to estimate the optimum DOP that a seller must apply on the current market value of a property in order to achieve highest SP price in the shortest TOM.FindingsThe results of this study also suggest that the degree of overpricing in thin and less transparent markets is higher than that in transparent markets with high property transaction volumes. In mature markets like the USA and the UK where the actual sold prices are published, the DOP is around 1.5% which is much lower than the 11% DOP identified in this study.Practical implicationsIt was found that buyers are willing to pay more for the same house in a bigger plot than a bigger house in the same plot. The outcome is that smaller houses sell faster at a higher price per square meter than larger houses. Smaller houses are more affordable than larger houses.Social implicationsThere is a large pool of buyers for smaller houses than bigger houses. Higher demand for smaller houses results in a higher price per square meter for smaller houses than the price per square meter for bigger houses. Respectively the TOM for smaller houses is shorter than the TOM for bigger houses.Originality/valueThe database used is unique, from an estate agent located in Paphos that managed to sell more than 27,000 properties in 20 years. This data set is the most accurate information for Cyprus' property transactions.
{"title":"Identifying how the time on the market affects the selling price: a case study of residential properties in Paphos (Cyprus) urban area","authors":"Philippos Nikiforou, T. Dimopoulos, P. Sivitanides","doi":"10.1108/jerer-11-2021-0051","DOIUrl":"https://doi.org/10.1108/jerer-11-2021-0051","url":null,"abstract":"PurposeThe purpose of this study is to investigate how the degree of overpricing (DOP) and other variables are associated with the time on the market (TOM) and the final selling price (SP) for residential properties in the Paphos urban area.Design/methodology/approachThe hedonic pricing model was used to examine the association of TOM and SP with various factors. The association of the independent variable of DOP and other independent variables with the two dependent variables of TOM and SP were investigated via ordinary least squares (OLS) regression models. In the first set of models the dependent variable was TOM and in the second set of models the dependent variable was SP. A sample of N = 538 completed transactions from Q1 2008 to Q2 2019 was used to estimate the optimum DOP that a seller must apply on the current market value of a property in order to achieve highest SP price in the shortest TOM.FindingsThe results of this study also suggest that the degree of overpricing in thin and less transparent markets is higher than that in transparent markets with high property transaction volumes. In mature markets like the USA and the UK where the actual sold prices are published, the DOP is around 1.5% which is much lower than the 11% DOP identified in this study.Practical implicationsIt was found that buyers are willing to pay more for the same house in a bigger plot than a bigger house in the same plot. The outcome is that smaller houses sell faster at a higher price per square meter than larger houses. Smaller houses are more affordable than larger houses.Social implicationsThere is a large pool of buyers for smaller houses than bigger houses. Higher demand for smaller houses results in a higher price per square meter for smaller houses than the price per square meter for bigger houses. Respectively the TOM for smaller houses is shorter than the TOM for bigger houses.Originality/valueThe database used is unique, from an estate agent located in Paphos that managed to sell more than 27,000 properties in 20 years. This data set is the most accurate information for Cyprus' property transactions.","PeriodicalId":44570,"journal":{"name":"Journal of European Real Estate Research","volume":null,"pages":null},"PeriodicalIF":1.3,"publicationDate":"2022-08-05","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"85626175","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2022-07-20DOI: 10.1108/jerer-02-2022-0004
M. Tomal
PurposeThis paper aims to explore the drivers behind the accuracy of self-reported home valuations in the Warsaw (Poland) housing market.Design/methodology/approachIn order to achieve the research goal, firstly, unique data on subjective residential property values estimated by their owners were compared with market-justified ones. The latter was calculated using geographically weighted regression, which allowed for taking into account spatially heterogeneous buyers' housing preferences. An ordered logit model was then used to identify the factors influencing the probability of the occurrence of bias towards over or undervaluation.FindingsThe results of the study revealed that, on average, homeowners overvalued their properties by only 1.94%, and the fraction of interviewees estimating their properties accurately ranges from 20% to 68%, depending on the size of the margin of error adopted. The drivers of the valuation bias variation were the physical, locational and neighbourhood attributes of the property as well as the personal characteristics of the respondents, for which their age and employment situation played a key role.Originality/valueIn contrast to previous studies, this is the first to examine drivers behind the accuracy of self-reported home valuations in a Central and Eastern Europe country. In addition, this work is the first to consider heterogeneous housing preferences when calculating objective property values.
{"title":"Drivers behind the accuracy of self-reported home valuations: evidence from an emerging economy","authors":"M. Tomal","doi":"10.1108/jerer-02-2022-0004","DOIUrl":"https://doi.org/10.1108/jerer-02-2022-0004","url":null,"abstract":"PurposeThis paper aims to explore the drivers behind the accuracy of self-reported home valuations in the Warsaw (Poland) housing market.Design/methodology/approachIn order to achieve the research goal, firstly, unique data on subjective residential property values estimated by their owners were compared with market-justified ones. The latter was calculated using geographically weighted regression, which allowed for taking into account spatially heterogeneous buyers' housing preferences. An ordered logit model was then used to identify the factors influencing the probability of the occurrence of bias towards over or undervaluation.FindingsThe results of the study revealed that, on average, homeowners overvalued their properties by only 1.94%, and the fraction of interviewees estimating their properties accurately ranges from 20% to 68%, depending on the size of the margin of error adopted. The drivers of the valuation bias variation were the physical, locational and neighbourhood attributes of the property as well as the personal characteristics of the respondents, for which their age and employment situation played a key role.Originality/valueIn contrast to previous studies, this is the first to examine drivers behind the accuracy of self-reported home valuations in a Central and Eastern Europe country. In addition, this work is the first to consider heterogeneous housing preferences when calculating objective property values.","PeriodicalId":44570,"journal":{"name":"Journal of European Real Estate Research","volume":null,"pages":null},"PeriodicalIF":1.3,"publicationDate":"2022-07-20","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"88832173","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}