Source: Economic Research Forum
Author(s): Shereen Attia
This paper applies hedonic pricing models to estimate the relationship between housing prices and characteristics and determines the implicit amount of housing consumed by a typical consumer by tenure type. The hedonic price approach is used to set up quality-adjusted price indices using household survey data. By estimating a semi-log hedonic function, the results showed that uncontrolled rent is higher on average than controlled units by around 9 percent after controlling for quality, while about 18 percent of the discrepancy in nominal rents is due to the fact that rent control is in effect. Therefore, the underpriced units drive out affordable units because of over-pricing at the higher end of the market and underpricing at the lower end of the market…
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