Parametric and Non-Parametric Statistical Methods in the Assessment of the Effect of Property Attributes on Prices

Abstract

One of the basic problems in the comparison-based property valuation process is to determine the influence of property attributes on their price differential. Due to the qualitative character of the majority of property attributes as well as to the distributions of both prices and attributes, their effect on the price differential is increasingly often assessed by means of non-parametric statistical methods. As a tool for determining the effect of attributes on prices, many authors propose parametric methods, in particular multiple regression models. The study presents a comparison of the results of property market attribute weight estimation obtained by means of the Spearman rank correlation coefficient with the ceteris paribus adjustment and the multiple regression model based on a set of transactions with built-up land property. In both of the analyzed methods, qualitative variables were modeled with the use of the Osgood semantic differential scale. The results of the analysis show the equivalence of the applied methods. Property attribute weights calculated using the method based on the rank correlation coefficient with the ceteris paribus adjustment and the multiple regression model, both with the same level of relevance, showed almost identical values. This indicates that both parametric and non-parametric methods can be used to estimate weights.

Investigating the Impact of Airport Noise and Land Use Restrictions on House Prices: Evidence from Selected Regional Airports in Poland

“…In general, as expected, more rigid restrictions seem to translate into higher discount in property prices, but again not always the results were statistically significant. Moreover, further research will have to deal with data quality issue-both omitted variable bias and measurement problem [59,60]. We conclude that more research is needed, especially because the problems of land use restrictions related to the operation of airports and its impact on property prices have been generally overlooked in the empirical research.…”

Methods of Analyzing Qualitative Variable Correlation on the Real Estate Market

“…An increasingly more common use of statistical and econometric methods in the process of real estate appraisal (particularly mass appraisal) necessitates the use of methods adequate to the quality of attributes that researchers have at their disposal. The use of correlation coefficients for qualitative variables on the real estate market was proposed by, inter alia, (Barańska, 2009;Kulczycki & Ligas 2014;Butryn & Preweda, 2017;Doszyń, 2017;Gaca, 2018).…”

Human emotion recognition in the significance assessment of property attributes

“…where: wg il -market attribute weight for particular property pair, C jl s , C jl k -real estate prices that differ in only one feature (s-highest level of attribute condition, k-lowest level of attribute condition, l-particular pair of property), max j C ij , min j C ij -minimum and maximum real estate prices on the local market, wg j -average market weighting coefficients of real estate features reflecting their influence on property prices, z-amount of property pairs. Other analytical approaches for determining the weights of market features are methods that are based on a correlation matrix between features and property prices (Barańska, 2019a, b;Gaca, 2018;Doszyń, 2017). Sawiłow (2004) proposes the determination of the weighting coefficients of real estate features on the basis of variation coefficients that are calculated according to Formula 3:…”