טכניון מכון טכנולוגי לישראל
הטכניון מכון טכנולוגי לישראל - בית הספר ללימודי מוסמכים  
M.Sc Thesis
M.Sc StudentSamuel Akpa-Yeboah
SubjectRisk and Return in the Greater Tel-Aviv Residential Market
DepartmentDepartment of Architecture and Town Planning
Supervisors Professor Gat Daniel
Professor Law-Yone Hubert


Abstract

The research investigated price and rent movement in owner-occupied residential real estate within seven towns in the Greater, Tel-Aviv Metropolitan Area. It viewed the owner-occupier as a housing consumer as well as an investor.

Risk and return relationship in the financial markets has suggested that in the housing market, owner investors may be compensated for risk by higher returns. This conjecture was supported by empirical data from the study area, but the existing financial market theory and models could not contribute a satisfactory explanation. A new theoretical model was invoked and used for generating testable hypothesis.

Empirically, a simple linear relationship between risk and return was tested and found significantly for each of the seven towns in the sample.

Moreover, a test for market integration or segregation was run (a dummy variable analysis of covariance model) and it was found that, but for the town of Bat Yam, all the rest could not be differentiated from the city of Tel-Aviv. That is, there exists one integrated metropolitan market rather than separate sub-markets, at least with regard to risk and return characteristics. Additional hypotheses tested were related to assumptions of the theoretical model and pertained to the factors contributing to risk and return.

The data supporting the theoretical argument were drawn from a small segment of time and space under unique demographic and economic shifts. Therefore, it is too early to draw any general conclusions.

However, the study raises the important issue of price and rent stability in owner-occupied real estate markets, their causes and their effects. The issue involves the wealth, welfare and housing qua1ity, of the genera public and ought to interest planners, economists, the public as well as private decision makers.