428. An Unobserved Components Approach to Separating Land from Structure in Property Prices: A Case Study for the City of Brisbane

Alicia N. Rambaldi, Ryan R. J. McAllister, Kerry Collins & Cameron S. Fletcher, School of Economics Discussion Paper No. 428 June 2011, School of Economics, The University of Queensland. Australia.

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Abstract

The study develops a spatio-temporal model of hedonic pricing that explicitly separates the land and the structure components of property prices. This is illustrated with a dataset for Brisbane, Australia, constructed by combining commercial real estate, local government databases and GIS-based spatial analyzes. The land component of prices has increased from 42% in 2000 to 66% in 2010. This has implications for a broad range of planning and policy issues, including property tax rates, town planning, and options for climate adaptations.