Comparing Repeated Sales Indices (BMN and Case-Shiller) in Real Estate Markets in City of Tehran

Document Type : Research Paper

Authors

1 Assistant Prof., Department of Finance and Insurance, Faculty of Management, University of Tehran, Tehran, Iran.

2 Assistant Prof., Eco College of Insurance, Allameh Tabataba'i University, Tehran, Iran.

3 M.Sc., Department of Financial, Faculty of Management, University of Tehran, Tehran, Iran.

Abstract

Objective: Real estate price fluctuations are one of the main concerns among policy makers, investors and also people as investors or consumers. Because of the heterogeneity feature of Real estate, measuring its fluctuations would a challenging task. Up to now, Real estate’s price movements have been measured by average indices in Iran. But, considering heterogeneoushome prices, it hasn’t been able to correctly demonstrate price movements, because if transaction of expensive Real estate increase in a given period, price index will increase whereas may home prices did not have such a trend at all. In developed countries, constant quality indices (hedonic and repeated sales indices) have been used for measuring fluctuations in real estate prices. In this research we try to develop a better index for Tehran housing market.
Methods: for this purpose, we have developed two repeated sales indices (Case_Shiller and BMN) for selected regions (1, 3, 6, 11, 16 and 20) during 1389 to 1396 and then we compare the indices by Out of sample Method.
Results: According to the out of sample method, the BMN index can better show the fluctuation of real estate markets in Tehran.
Conclusion: Considering that the repeated selling indices can measure fluctuation of real estate markets better than average indices, we suggest that investors and policymakers use the BMN index to check the fluctuation of real estate markets.

Keywords

References

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Financial Research Journal
Volume 21, Issue 3
2019
Pages 348-363

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