CREATING A CONSTANT QUALITY PRICE INDEX FOR SHOPPING CENTRE

Abstract

In view of the limitation in the URA price index, the study sets out to provide a constant quality price index for Singapore using the hedonic approach. The constructed hedonic index has successfully controlled for the varying characteristics of properties over time. Hence, the constructed hedonic index is deemed to be a better indication of the pure market movements. This study has also further the understanding of the commercial price index construction by having a shopping center price index. Additionally, this study has identified that there is a structural change over different phases of the market cycle. Hence, this study has constructed two separate price indices to represent two distinct phases of the market cycle. Using URA shop space price index as a benchmark, comparisons are made between the hedonic price index and the URA price index. A median price index is also constructed using the same dataset as the hedonic price index. Comparisons of the difference in the two methodologies show that the median price index is more volatile than the hedonic price index throughout the study period. This is greatly attributed to the fact that there is no control of the varying characteristics of properties over time in the median price index.