Drivers behind the accuracy of self-reported home valuations: evidence from an emerging economy

Abstract

PurposeThis paper aims to explore the drivers behind the accuracy of self-reported home valuations in the Warsaw (Poland) housing market.Design/methodology/approachIn order to achieve the research goal, firstly, unique data on subjective residential property values estimated by their owners were compared with market-justified ones. The latter was calculated using geographically weighted regression, which allowed for taking into account spatially heterogeneous buyers' housing preferences. An ordered logit model was then used to identify the factors influencing the probability of the occurrence of bias towards over or undervaluation.FindingsThe results of the study revealed that, on average, homeowners overvalued their properties by only 1.94%, and the fraction of interviewees estimating their properties accurately ranges from 20% to 68%, depending on the size of the margin of error adopted. The drivers of the valuation bias variation were the physical, locational and neighbourhood attributes of the property as well as the personal characteristics of the respondents, for which their age and employment situation played a key role.Originality/valueIn contrast to previous studies, this is the first to examine drivers behind the accuracy of self-reported home valuations in a Central and Eastern Europe country. In addition, this work is the first to consider heterogeneous housing preferences when calculating objective property values.