The Hedonic Pricing Model Applied to the Housing Market

Nguyen, My-Linh Thi

doi:10.35808/ijeba/526

Cited by 3 publications

(7 citation statements)

References 22 publications

(43 reference statements)

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“…The findings of this paper generally reinforce the consensus that property values are influenced by their internal and external attributes: structural, locational and neighbourhood characteristics (see for example Brett et al, 2003;Kieti and Ogolla, 2021;McCluskey and Borst, 2007;Thanasi, 2016). Several studies, for instance, have found apartment size to be the most significant factor influencing its value positively (see Ahmed and Yacim, 2018;Belete and Yilma (2020);Nguyen, 2020;Randeniya et al (2017);Thanasi, 2016;Sirmans et al, 2005, amongst other studies). Similarly, location (usually measured in distance from the CBD) has been identified by most existing studies as an important variable negatively influencing property values (see for example Ayan and Erkin (2014); Ferlan et al (2017); Frew and Wilson, 2002;McCluskey and Borst, 2007;Randeniya et al (2017); Oduwole andEze, 2013, Ottensmann et al, 2008, amongst others).…”

Section: Discussionsupporting

confidence: 85%

“…The level of amenities and services has always been determined to have a positive influence on property values as they are likely to enhance the utility of the consumer. The provision of a shared swimming pool and the gym has been found to have a positive influence on apartment values elsewhere (Kieti and Ogolla, 2021;Nguyen, 2020;Sirmans et al, 2005). The existing research has also established that quality floor finishes have positive affection on property values (Nguyen et al, 2020;Thanasi, 2016).…”

Section: Discussionmentioning

confidence: 98%

“…Other recent studies that have used the HPM to value properties include research by Nguyen et al (2020) and Nguyen (2020), both carried out in the Vietnam property market. The apartment built-up area, the number of bathrooms and bedrooms, the apartment floor finishes, reference price and the apartment interior were all found to be positively influencing apartment prices.…”

Section: Literature Reviewmentioning

confidence: 99%

“…Other recent studies that have used the HPM to value properties include research by Nguyen et al. (2020) and Nguyen (2020), both carried out in the Vietnam property market.…”

Section: Literature Reviewmentioning

confidence: 99%

“…The apartment built-up area, the number of bathrooms and bedrooms, the apartment floor finishes, reference price and the apartment interior were all found to be positively influencing apartment prices. However, apartment price trends, distance to the CBD and the potential of the apartment building were found to be affecting apartment values negatively (Nguyen et al. , 2020).…”

Section: Literature Reviewmentioning

confidence: 99%

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Modelling apartments values in the Nairobi metropolitan area, Kenya

Museleku

2022

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PurposeThe purpose of this paper is to determine the most significant factors influencing apartment values in Nairobi Metropolitan Area (NMA), Kenya and develop a valuation model using the identified variables. The paper is thus promoting the adoption of advanced, more reliable and accurate valuation methods in developing economies such as Kenya. Therefore, the paper demonstrates the potential of the hedonic pricing method (HPM) in property valuation by making objective adjustments to comparable sales data.Design/methodology/approachThe paper utilizes a case study design by analysing recent (January 2020 to December 2021) apartment sales and apartment attributes in NMA. A sample size of 264 transactions was analysed using the HPM.FindingsThe study identified six significant factors affecting apartment values in the study area: apartment size, location, floor finishes, provision of shopping facilities, swimming pool and gym. A valuation model has been developed using the six variables.Research limitations/implicationsThe paper is contributing to the ongoing global debate on the accuracy, reliability and validity of property valuations with particular emphasis on the developing economies to adopt the more accurate, efficient and reliable valuation approaches.Practical implicationsThe findings are useful to property valuers and estate managers in determining the most statistically significant attributes affecting apartment values in the NMA hence enabling them to offer informed professional advice. However, the findings of the study are limited to the study area since real estate is heterogeneous.Social implicationsProperty investors, financiers and other stakeholders in the society will benefit from the findings of this study in their decision-making process. Additionally, wide adoption of the more reliable and accurate valuation approaches would foster public confidence in valuation and estate management professional services leading to enhanced consumption of these services by the society and promoting public care.Originality/valueThe paper is promoting valuation accuracy, efficiency and reliability in the developing economies by advocating for advanced valuation methods. It is the first attempt to develop a valuation model for apartments in the NMA, the capital city of Kenya and the business hub of East and Central Africa.

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Section: Discussionsupporting

confidence: 85%

Section: Discussionmentioning

confidence: 98%

Section: Literature Reviewmentioning

confidence: 99%

“…Other recent studies that have used the HPM to value properties include research by Nguyen et al. (2020) and Nguyen (2020), both carried out in the Vietnam property market.…”

Section: Literature Reviewmentioning

confidence: 99%

Section: Literature Reviewmentioning

confidence: 99%

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Modelling apartments values in the Nairobi metropolitan area, Kenya

Museleku

2022

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Willingness to accept and willingness to pay for residential properties: a hedonic model approach

Mishi,

Mwanyepedza

2023

EOR

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The world over is becoming urbanized, and people are migrating to cities in large numbers in search of opportunities. The increased urbanization has posed challenges such as congestion, rising crime, and growing urban poverty. The governments respond by providing amenities such as schools, hospitals, and housing to meet to increase in demand for these facilities. However, there is a need for the provision of facilities that meets the expectations of the people, particularly on the proximity of amenities and bundles of utility-bearing housing characteristics. In an attempt to address the challenge mentioned, the study estimated the hedonic characteristics influencing the willingness to accept and willingness to pay for housing facilities in the Eastern Cape Province, South Africa. Using a multiple linear regression model and artificial neural network, the study found out that properties with a bathroom, garage and large floor size have a higher value compared to properties without these facilities.When making decisions to acquire a property, buyers consider the availability of discounts and the prevailing property price. Overall, willingness to pay and accept decisions are mainly determined by location and the price at which homogeneous neighborhood properties were sold. Therefore, the study recommends that urban town planners and other housing authorities prioritize the construction of properties with larger floor areas, parking bays, and bathrooms using a cost-effective mechanism that makes the properties affordable to residents.

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Willingness to Accept and Willingness to Pay for Residential Properties: A Hedonic Model Approach

Mishi

2023

Emerald Open Res

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The world over is becoming urbanized, and people are migrating to cities in large numbers in search of opportunities. The increased urbanization has posed challenges such as congestion, rising crime, and growing urban poverty. The governments respond by providing amenities such as schools, hospitals, and housing to meet to increase in demand for these facilities. However, there is a need for the provision of facilities that meets the expectations of the people, particularly on the proximity of amenities and bundles of utility-bearing housing characteristics. In an attempt to address the challenge mentioned, the study estimated the hedonic characteristics influencing the willingness to accept and willingness to pay for housing facilities in the Eastern Cape Province, South Africa. Using a multiple linear regression model and artificial neural network, the study found out that properties with a bathroom, garage and large floor size have a higher value compared to properties without these facilities. When making decisions to acquire a property, buyers consider the availability of discounts and the prevailing property price. Overall, willingness to pay and accept decisions are mainly determined by location and the price at which homogeneous neighborhood properties were sold. Therefore, the study recommends that urban town planners and other housing authorities prioritize the construction of properties with larger floor areas, parking bays, and bathrooms using a cost-effective mechanism that makes the properties affordable to residents.

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The Hedonic Pricing Model Applied to the Housing Market

Cited by 3 publications

References 22 publications

Modelling apartments values in the Nairobi metropolitan area, Kenya

Modelling apartments values in the Nairobi metropolitan area, Kenya

Willingness to accept and willingness to pay for residential properties: a hedonic model approach

Willingness to Accept and Willingness to Pay for Residential Properties: A Hedonic Model Approach

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