Estimating Estate-Specific Price-to-Rent Ratios in Shanghai and Shenzhen: A Bayesian Approach

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Estimating Estate-Specific Price-to-Rent Ratios in Shanghai and Shenzhen: A Bayesian Approach

Please use this identifier to cite or link to this item: http://hdl.handle.net/10355/10324

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Title: Estimating Estate-Specific Price-to-Rent Ratios in Shanghai and Shenzhen: A Bayesian Approach
Author: Chen, Jie, 1980-; Ni, Shawn, 1962-
Keywords: housing cost
housing investment
Date: 2010
Publisher: Department of Economics
Citation: Department of Economics, 2010
Series/Report no.: Working papers (Department of Economics);WP 10-15
Abstract: The price-to-rent ratio, a common yardstick for the value of housing, is difficult to estimate when rental properties are poor substitutes of owner-occupied homes. In this study we estimate price-to-rent ratios of residential properties in two major cities in China, where urban high-rises (estates) comprise both rental and owner-occupied units. We conduct Bayesian inference on estate-specific parameters, using information of rental units to elicit priors of the unobserved rents of units sold in the same estate. We find that the price-to-rent ratios tend to be higher for low-end properties. We discuss economic explanations for the phenomenon and the policy implications.
URI: http://hdl.handle.net/10355/10324

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  • Economics publications (MU) [120]
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