Do Construction Costs Reflect the True Information in the Real Estate Markets

DOI

10.2991/iea-15.2015.147How to use a DOI?

Keywords

construction costs; misleading information; the fixed- effects model; the dynamic model considering cross-section dependence.

Abstract

Many academics criticized municipal governments and state-owned enterprises (SOEs) promote land prices to increase. The criticism is based on the assumption that land prices reflect the true information in the land transactions. However, municipal governments and SOEs might be misled by information hidden in land prices. Land prices are a part of construction costs. My contribution was to find out whether construction costs provide misleading information. The methodologies were based on the fixed- effects model and the dynamic model considering cross-section dependence, using the fixed- effects regression and the augmented mean group estimation. By studying the relationships between construction costs and factors affecting construction costs, I found that construction costs do not response to any change in different variables, which are average incomes and real estate investments except the bubbles. Therefore, construction costs deliver misleading information, which violates the assumption, many academic believed.

Copyright

© 2015, the Authors. Published by Atlantis Press.

Open Access

This is an open access article distributed under the CC BY-NC license (http://creativecommons.org/licenses/by-nc/4.0/).

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TY  - CONF
AU  - Kuang Ruihu
PY  - 2015/09
DA  - 2015/09
TI  - Do Construction Costs Reflect the True Information in the Real Estate Markets
BT  - Proceedings of the AASRI International Conference on Industrial Electronics and Applications (2015)
PB  - Atlantis Press
SP  - 592
EP  - 595
SN  - 2352-5401
UR  - https://doi.org/10.2991/iea-15.2015.147
DO  - 10.2991/iea-15.2015.147
ID  - Ruihu2015/09
ER  -