The impact of infrastructure charges on house prices in Australia

Developer paid fees or charges are a commonly used mechanism for local governments to pay for new infrastructure. However, property developers claim that these costs are merely passed on to home buyers, with adverse effects to housing affordability. Despite numerous government reports and many years of industry advocacy, there remains no empirical evidence in Australia to confirm or quantify this passing on effect to home buyers. Hence there remains no data from which governments can base policy decision on, and the debate continues. This paper examines the question of the impact of infrastructure charges on housing affordability in Australia. It presents the findings of a hedonic house price model that provides the first empirical evidence that infrastructure charges do increase house prices in Australia. This research is consistent with international findings, that support the proposition that developer paid infrastructure charges are passed on to home buyers and are a significant contributor to increasing house prices and reduced housing affordability.

Co-movements in commodity prices : a note based on network analysis

This article analyses co-movements in a wide group of commodity prices during the time period 1992–2010. Our methodological approach is based on the correlation matrix and the networks inside. Through this approach we are able to summarize global interaction and interdependence, capturing the existing heterogeneity in the degrees of synchronization between commodity prices. Our results produce two main findings: (a) we do not observe a persistent increase in the degree of co-movement of the commodity prices in our time sample, however from mid-2008 to the end of 2009 co-movements almost doubled when compared with the average correlation; (b) we observe three groups of commodities which have exhibited similar price dynamics (metals, oil and grains, and oilseeds) and which have increased their degree of co-movement during the sampled period.

Infrastructure charges and residential land prices in Brisbane, Australia

This paper examines the question of whether the imposition of developer infrastructure charges on housing developers affects the price of residential land. Developer paid fees or charges are a commonly used mechanism for local governments to fund new infrastructure as a “user pays” method of funding new urban infrastructure. Some argue these costs are passed back to the original land owner by way of lower land prices. However, property developers claim these charges are added on to new land prices, with flow on negative impact to housing affordability. This paper presents the findings of a hedonic land price model that provides the first empirical evidence that infrastructure charges do increase residential land prices in Brisbane, Australia. This research is consistent with international findings and supports the proposition that developer paid infrastructure charges are over-passed to home buyers and are a significant contributor to reduced housing affordability.

Factors affecting farmland prices in Finland

The purpose of the study was to analyse factors affecting the differences in land prices between regions. The key issue was to find out the policy effects on farmland prices. In addition to comprehensive literature review, a theoretical analysis as well as modern panel and spatial econometric techniques were utilized. The study clearly pointed out the importance of taking into account the possible spatial dependence. The data were exceptionally large, comprising more than 6 000 observations. Thus, it allowed a thorough econometric estimation including the possibility to take into account the spatial nature of the data. This study supports the view that there are many other factors that affect farmland prices besides pure agricultural returns. It was also found that the support clearly affects land prices. However, rather than assuming the discount rates for support and market returns to be similar, the rough analysis refers to the discount rate for support being a little lower. If this were true it would indicate that farmers rely more on support income than market returns. The results support the view presented in literature that land values are more responsive to government payments when these payments are perceived to be permanent. An important result of this study is that the structural differences between regions and the structural change in agriculture seemed to have a considerable role in affecting land prices. Firstly, the present structure affects the competition in the land market: the more dense farms are in the region the more there are potential buyers, and the land price increases. Secondly, the change in farm structure (especially in animal husbandry) connected to the policy changes that increase area-based support affects land prices. The effect comes from two sources. Growing farms need more land for the manure, and the proportion of retiring farmers may be lower. The introduction of the manure density variable proved to be an efficient way to aggregate the otherwise very difficult task of taking into account the environmental pressure caused by structural change in animal husbandry. Finally, infrastructure also has a very important role in determining the price level of agricultural land. If other industries are prospering in the surrounding area, agricultural viability also seems to improve. The non-farm opportunities offered to farm families make continuing and developing farming more tempting.

Consumers' attitudes towards food prices

High food prices can be a barrier to healthy eating because some of the food products may be perceived as expensive. Understanding the role of price in food purchase situations is important, but only a few studies document attitudes towards expensiveness or cheapness in foods. In this thesis, the role of food price in food choice and consumers attitudes towards food prices were investigated and the aim was to measure the food price attitudes. Food price attitudes were hypothesized to have an impact on consumers willingness to pay judgements and their willingness to buy premium-priced food products. First, using qualitative data consisting of 40 thematic interviews the experiences of the expensiveness and cheapness in foods were explored by using functional food products as a target product category. Second, a Food Price Attitude Scale was developed using four quantitative surveys representing Finnish consumers (2001 N=1158; 2002 N=1156; 2004a N=1113; 2004b N=1027). Food price attitudes were confirmed to compose a multidimensional construct and consumers may perceive positive and negative attitudes towards both high and low food prices. Finnish consumers were clustered into four groups based on their food price attitudes. In the first group, 29% of respondents were negative towards high food prices and they were willing to seek low food prices, whereas respondents in another group (22%) were positive towards high food prices. Additionally, in the third group consumers (17%) were willing to pay for high quality but still looked for low food prices. In the fourth group, consumers (32%) were willing to look for low food prices, unwilling to pay for high quality, but high-priced food was appreciated if offered to others. It was found in qualitative data that consumers willingness to accept high prices in foods was connected to price fairness and to justifications. Feelings of fairness or unfairness might be a core element of food price attitudes. Using quantitative methods, it was confirmed that positive attitudes towards high food prices in terms of high quality enhanced consumers willingness to buy food products with certain benefits (e.g., a health claim). Additionally, the favourable attitude towards low food prices lowered the willingness to pay estimates. This type of tendency, however, can create a possible bias in small convenient samples. In the food price-related research, it is advisable to take into account food price attitudes as possible background variables. The Food Price Attitude Scale needs further development to increase construct validity even though, in the present study, it was shown to be a reliable measure with good predictive and discriminant validity. The theoretical and managerial implications of the results for a better understanding of the role of price in consumers food purchases are discussed.

Gold mining in the Peruvian Amazon: global prices, deforestation, and mercury imports.

Many factors such as poverty, ineffective institutions and environmental regulations may prevent developing countries from managing how natural resources are extracted to meet a strong market demand. Extraction for some resources has reached such proportions that evidence is measurable from space. We present recent evidence of the global demand for a single commodity and the ecosystem destruction resulting from commodity extraction, recorded by satellites for one of the most biodiverse areas of the world. We find that since 2003, recent mining deforestation in Madre de Dios, Peru is increasing nonlinearly alongside a constant annual rate of increase in international gold price (∼18%/yr). We detect that the new pattern of mining deforestation (1915 ha/year, 2006-2009) is outpacing that of nearby settlement deforestation. We show that gold price is linked with exponential increases in Peruvian national mercury imports over time (R(2) = 0.93, p = 0.04, 2003-2009). Given the past rates of increase we predict that mercury imports may more than double for 2011 (∼500 t/year). Virtually all of Peru's mercury imports are used in artisanal gold mining. Much of the mining increase is unregulated/artisanal in nature, lacking environmental impact analysis or miner education. As a result, large quantities of mercury are being released into the atmosphere, sediments and waterways. Other developing countries endowed with gold deposits are likely experiencing similar environmental destruction in response to recent record high gold prices. The increasing availability of satellite imagery ought to evoke further studies linking economic variables with land use and cover changes on the ground.

Virtual power players demand response programs management based on locational marginal prices

Power systems have been suffering huge changes mainly due to the substantial increase of distributed generation and to the operation in competitive environments. Virtual power players can aggregate a diversity of players, namely generators and consumers, and a diversity of energy resources, including electricity generation based on several technologies, storage and demand response. Resource management gains an increasing relevance in this competitive context, while demand side active role provides managers with increased demand elasticity. This makes demand response use more interesting and flexible, giving rise to a wide range of new opportunities.This paper proposes a methodology for managing demand response programs in the scope of virtual power players. The proposed method is based on the calculation of locational marginal prices (LMP). The evaluation of the impact of using demand response specific programs on the LMP value supports the manager decision concerning demand response use. The proposed method has been computationally implemented and its application is illustrated in this paper using a 32 bus network with intensive use of distributed generation.

The European organic food market - how to increase its transparency?

Der Europäische Markt für ökologische Lebensmittel ist seit den 1990er Jahren stark gewachsen. Begünstigt wurde dies durch die Einführung der EU-Richtlinie 2092/91 zur Zertifizierung ökologischer Produkte und durch die Zahlung von Subventionen an umstellungswillige Landwirte. Diese Maßnahmen führten am Ende der 1990er Jahre für einige ökologische Produkte zu einem Überangebot auf europäischer Ebene. Die Verbrauchernachfrage stieg nicht in gleichem Maße wie das Angebot, und die Notwendigkeit für eine Verbesserung des Marktgleichgewichts wurde offensichtlich. Dieser Bedarf wurde im Jahr 2004 von der Europäischen Kommission im ersten „Europäischen Aktionsplan für ökologisch erzeugte Lebensmittel und den ökologischen Landbau“ formuliert. Als Voraussetzung für ein gleichmäßigeres Marktwachstum wird in diesem Aktionsplan die Schaffung eines transparenteren Marktes durch die Erhebung statistischer Daten über Produktion und Verbrauch ökologischer Produkte gefordert. Die Umsetzung dieses Aktionsplans ist jedoch bislang nicht befriedigend, da es auf EU-Ebene noch immer keine einheitliche Datenerfassung für den Öko-Sektor gibt. Ziel dieser Studie ist es, angemessene Methoden für die Erhebung, Verarbeitung und Analyse von Öko-Marktdaten zu finden. Geeignete Datenquellen werden identifiziert und es wird untersucht, wie die erhobenen Daten auf Plausibilität untersucht werden können. Hierzu wird ein umfangreicher Datensatz zum Öko-Markt analysiert, der im Rahmen des EU-Forschungsprojektes „Organic Marketing Initiatives and Rural Development” (OMIaRD) erhoben wurde und alle EU-15-Länder sowie Tschechien, Slowenien, Norwegen und die Schweiz abdeckt. Daten für folgende Öko-Produktgruppen werden untersucht: Getreide, Kartoffeln, Gemüse, Obst, Milch, Rindfleisch, Schaf- und Ziegenfleisch, Schweinefleisch, Geflügelfleisch und Eier. Ein zentraler Ansatz dieser Studie ist das Aufstellen von Öko-Versorgungsbilanzen, die einen zusammenfassenden Überblick von Angebot und Nachfrage der jeweiligen Produktgruppen liefern. Folgende Schlüsselvariablen werden untersucht: Öko-Produktion, Öko-Verkäufe, Öko-Verbrauch, Öko-Außenhandel, Öko-Erzeugerpreise und Öko-Verbraucherpreise. Zudem werden die Öko-Marktdaten in Relation zu den entsprechenden Zahlen für den Gesamtmarkt (öko plus konventionell) gesetzt, um die Bedeutung des Öko-Sektors auf Produkt- und Länderebene beurteilen zu können. Für die Datenerhebung werden Primär- und Sekundärforschung eingesetzt. Als Sekundärquellen werden Publikationen von Marktforschungsinstituten, Öko-Erzeugerverbänden und wissenschaftlichen Instituten ausgewertet. Empirische Daten zum Öko-Markt werden im Rahmen von umfangreichen Interviews mit Marktexperten in allen beteiligten Ländern erhoben. Die Daten werden mit Korrelations- und Regressionsanalysen untersucht, und es werden Hypothesen über vermutete Zusammenhänge zwischen Schlüsselvariablen des Öko-Marktes getestet. Die Datenbasis dieser Studie bezieht sich auf ein einzelnes Jahr und stellt damit einen Schnappschuss der Öko-Marktsituation der EU dar. Um die Marktakteure in die Lage zu versetzen, zukünftige Markttrends voraussagen zu können, wird der Aufbau eines EU-weiten Öko-Marktdaten-Erfassungssystems gefordert. Hierzu wird eine harmonisierte Datenerfassung in allen EU-Ländern gemäß einheitlicher Standards benötigt. Die Zusammenstellung der Marktdaten für den Öko-Sektor sollte kompatibel sein mit den Methoden und Variablen der bereits existierenden Eurostat-Datenbank für den gesamten Agrarmarkt (öko plus konventionell). Eine jährlich aktualisierte Öko-Markt-Datenbank würde die Transparenz des Öko-Marktes erhöhen und die zukünftige Entwicklung des Öko-Sektors erleichtern. ---------------------------

Temporary and Permanent Buyout Prices in Online Auctions

Increasingly used in online auctions, buyout prices allow bidders to instantly purchase the item listed. We distinguish two types: a temporary buyout option disappears if a bid above the reserve price is made; a permanent one remains throughout the auction or until it is exercised. In a model featuring time-sensitive bidders with uniform valuations and Poisson arrivals but endogenous bidding times, we focus on finding temporary and permanent buyout prices maximizing the seller's discounted revenue, and examine the relative benefit of using each type of option in various environments. We characterize equilibrium bidder strategies in both cases and then solve the problem of maximizing seller's utility by simulation. Our numerical experiments suggest that buyout options may significantly increase a seller’s revenue. Additionally, while a temporary buyout option promotes early bidding, a permanent option gives an incentive to the bidders to bid late, thus leading to concentrated bids near the end of the auction.

Forecasting the spot prices of various coffee types using linear and non-linear error correction models

Este documento estima modelos lineales y no-lineales de corrección de errores para los precios spot de cuatro tipos de café. En concordancia con las leyes económicas, se encuentra evidencia que cuando los precios están por encima de su nivel de equilibrio, retornan a éste mas lentamente que cuando están por debajo. Esto puede reflejar el hecho que, en el corto plazo, para los países productores de café es mas fácil restringir la oferta para incrementar precios, que incrementarla para reducirlos. Además, se encuentra evidencia que el ajuste es más rápido cuando las desviaciones del equilibrio son mayores. Los pronósticos que se obtienen a partir de los modelos de corrección de errores no lineales y asimétricos considerados en el trabajo, ofrecen una leve mejoría cuando se comparan con los pronósticos que resultan de un modelo de paseo aleatorio.

Does foreign investment affect US office real estate prices?

his article examines the impact of foreign real estate investment on U.S. office market capitalization rates. The geographic unit of analysis is MSA and the time period is 2001–2013. Drawing upon a database of commercial real estate transactions, the authors model the determinants of market capitalization rates with a particular focus on the significance of the proportion of market transactions involving foreign investors. Employing several econometric techniques to analyze the data, the results suggest statistically significant effects of foreign investment across 38 U.S. metro areas. It is estimated that, all else equal, a 100 basis point increase in foreign share of total investment in a U.S. metropolitan office market causes about an 8 basis point decrease in the market cap rate.

The effect of increased water prices on construction

The research aimed to investigate the effect an increase in water prices would have on construction. It was found that while there is a considerable amount of water embodied in construction the actual effect of a water tax on construction would be minimal unless implemented at the highest rate.

Reading house prices in Australian capital cities

House prices in the Australian capital cities have been increasing over the last two decades. An over 10% average annual increase arises in the capital cities. In Melbourne, Brisbane and Perth, the house prices increased by more than 15% annually, while the house prices in Darwin increased by even higher at about 21%. It is surprising that, after a decrease in 2008, the house prices in the Australian capital cities show a strong recovery in their last financial year’s increase. How to read the house prices in cities across a country has been an issue of public interest since the late 1980s. Various models were developed to investigate the behaviours of house prices over time or space. A spatio-temporal model, introduced in recent literature, appears advantages in accounting for the spatial effects on house prices. However, the decay of temporal effects and temporal dynamics of the spatial effects cannot be addressed by the spatio-temporal model. This research will suggest a three-part decomposition framework in reading urban house price behaviours. Based on the spatio-temporal model, a time weighted spatio-temporal model is developed. This new model assumes that an urban house price movement should be decomposed by urban characterised factors, time correlated factors and space correlated factors. A time weighted is constructed to capture the temporal decay of the time correlated effects, while a spatio-temporal weight is constructed to account for the timevaried space correlated effects. The house prices of the Australian capital cities are investigated by using the time weighted spatio-temporal model. The empirical findings suggest that the housing markets should be clustered by their geographic locations. The rest parts of this paper are organised as follows. The following section will present a principle for reading urban house prices. The next section will outline the methodologies modelling the time weighted spatio-temporal model. The subsequent section will report the relative data and empirical results, while the final section will generate the conclusions.

lnvestigating spatial linkages of construction prices in Australia's regions

Linkages among different construction markets have attracted great of attention from the construction economist. With notable exceptions, most of this infestation has carried out by using input-output analysis. Interactions among regional construction markets have been discussed in few studies and none of them investigate spatial effects on the regional construction markets. This study employed spatial econometric techniques, spatial autocorrelation and convergence tests, to analysis interactions and linkages among construction price indices in Australian six states and two territories. The empirical results indicate the presence of significant positive spatial correlation between the construction prices in Australian eight construction markets and the degree of dependence decrease sufficiently quickly as the space between units increase. The results of convergence test further present evidence on "ripple effect" in the construction prices in Australian regional markets and the changes in regional construction price would positively influence neighboring states first, and then spread out into others, and then the regional prices converge and reach a long-run equilibrium in the following quarters. Urban development policymakers and construction developers could benefit from the analysis of spatial linkages in regional construction markets.

Changes in use of types of tobacco products by pack sizes and price segments, prices paid and consumption following the introduction of plain packaging in Australia

Objectives: To describe changes among smokers in use of various types of tobacco products, reported prices paid and cigarette consumption following the standardisation of tobacco packaging in Australia.
Methods: National cross-sectional telephone surveys of adult smokers were conducted from April 2012 (6 months before transition to plain packaging (PP) to March 2014 (15 months afterwards). Multivariable logistics regression assessed changes in products, brands and pack types/sizes; multivariable linear regression examined changes in inflation-adjusted prices paid and reported cigarette consumption between the pre-PP and three subsequent periods – the transition phase, PP year 1 and PP post-tax (post a 12.5% tax increase in December 2013).
Results: The proposition of current smokers using roll-your-own (RYO) products fluctuated over the study period. Proportions using value brands of factory-made (FM) cigarettes increased from pre-PP (21.4%) to PP year 1 (25.5%; p=0.002) and PP post-tax (27.8%; p<0.001). Inflation-adjusted prices paid increased in the PP year 1 and PP post-tax phases; the largest increases were among premium FM brands, the smallest among value brands. Consumption did not change in PP year 1 among daily, regular or current smokers declined significantly in PP post-tax (mean=14.0, SE=0.33) compared to PP year 1 (mean=14.8, SE=0.17; p=0.037).
Conclusions: Introduction of PP was associated with an increase in use of value brands, likely due to increased numbers available and smaller increases in prices for value relative to premium brands. Reported consumption declined following the December 2013 tax increase.