Disentanglement of Age, Time and Vintage Effects on Housing Price by Forward Contracts

Age, time and vintage effects are exact collinear, so their effects cannot be disentangled in regression analyses. Suggestions have been put forward to deal with this problem, but in vain. Since the problem of exact collinearity requires external information to solve, any manipulation of the existing data is doomed to fail. This paper circumvents the problem fundamentally by exploiting housing forward contracts, which can estimate vintage effects in housing by using a-priori information in pre-occupation sales (i.e. forward contracts). An empirical illustration of a housing estate in Hong Kong is provided