Quotation Herath, Shanaka, Maier, Gunther. 2009. The Hedonic Price Method in Real Estate and Housing Market Studies: A Review of the Literature. 49th European Congress of the Regional Science Association International, Łódź, Polen, 25.08.-29.08.


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Abstract

The hedonic price method, also known as the hedonic regression, is used for estimating the value of a commodity or the demand for a commodity that directly affects market prices. The methodology has been extensively used in real estate and housing market studies in the recent past. In this paper, we discuss theoretical developments related to the hedonic price method and empirical real estate studies that use the prescribed methodology. We first define the hedonic price method, and explain the fundamentals behind the methodology. The idea behind the hedonic price method is that the commodities are characterized by their properties, and the value of a commodity can be calculated by adding up the values of its separate properties. The heterogeneous nature of real estate property justifies the use of hedonic price method for estimating their value or demand. In a separate section, we review significant contributions to the housing and real estate research using the hedonic price methodology. Our focus in this section is on the variables that have explanatory power to determine the value of real estate assets including attributes of the spatial unit, infrastructure, natural environment, social environment, ecology, and quality of design and architecture. Furthermore, the survey emphasises on hedonic studies that involve different asset types, for instance, single family homes, offices, etc. We also shed some light on regression analysis related estimation approaches that are commonly used to estimate hedonic models of real estate and housing.

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Publication's profile

Status of publication Published
Affiliation WU
Type of publication Paper presented at an academic conference or symposium
Language English
Title The Hedonic Price Method in Real Estate and Housing Market Studies: A Review of the Literature
Event 49th European Congress of the Regional Science Association International
Year 2009
Date 25.08.-29.08
Country Poland
Location Łódź
URL http://www.ersa.org/ersa-congress/

Associations

People
Herath, Shanaka (Former researcher)
Maier, Gunther (Details)
Organization
Institute for Multi-Level Governance and Development IN (Details)
Research Institute for Spatial and Real Estate Economics FI (Details)
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