An Inquiry into the Determinants of the Rents ofSmall Urban Houses Using Spatial Hedonic Price Modeling

Abstract

The purpose of this study is to analyze the determinants of rent for urban residential housing in Seoul, using general hedonic model and spatial hedonic model, and to compare differences in rent determinants between small housing and general housing and differences in determinants according to analysis methods. The results of analysis show high spacial auto-correlation in rent for urban residential housing in Seoul, which requires the application of a spatial hedonic model for its proper control. High rent for urban residential housing located at ordinary residential areas is judged to result from cheap land price, simple development procedure, and sharing of residential environment infrastructure. Office hotspot and accessibility to bus stop have no significant effects, for bus stops can be a factor in deterioration of residential environment due to noise, traffic accident and particulates. While accessibility to natural environment like park and river acts as an important premium in general housing, they have no significant effects on urban residential housing, because one-person households, two-person households and young people, the main consumers of urban residential housing, satisfy their diverse needs within homes, and thus may not consider surrounding natural environment as important in the selection of residential location. To enhance residential stability for small households as well as improve residential environment for neighborhood residents, it is necessary to make efforts to manage regional housing supply and residential environment comprehensively.