The first stage establishes a link between an asset's worth or price (which would be the dependent variable in the analysis) and the independent explanatory variables (which include the property's features, location features, and environmental qualities). Hedonic regression analysis is divided into two components. Models of Hedonic Regression and Analysis A hedonic pricing model for valuing assets is reasonably simple because it is based on actual market prices and complete, publicly available data sets. If non-environmental elements are adjusted for (kept constant) in this type of model, any remaining price variances will represent differences in the good's external surroundings. The hedonic pricing model is used to calculate the impact of each aspect on the property's market price. Here, the price of a building or piece of Land is determined by internal and external factors such as the size, appearance, features such as solar panels or state-of-the-art faucet fixtures, condition of the property, and the surrounding environment. The primary application of the hedonic pricing method is in the real estate Market. Following a data collection period, this type of valuation may necessitate a high level of statistical skill and model formulation. Hedonic pricing models are frequently employed to assess quantitative values for environmental or ecosystem services that directly impact property prices. Hedonic pricing is a pricing model that finds price determinants based on the idea that price is determined by internal and external aspects of the sold object. What is Hedonic Pricing? Updated on J, 242 views Models of Hedonic Regression and Analysis.More than that, the findings are also essential for other countries, especially those with a nascent housing market like Vietnam. Originality/Value: The study confirms the hedonic pricing model can be well-applied to accurately estimate the price of houses in Vietnam. Practical Implications: The estimated results are typical and reliable, which can be applied universally. Also, factors including house size, house type, house structure, number of bedrooms, amenities around the house exert a positive influence on the price. Specifically, house price is negatively affected by its proximity to the city center. This can be said to be a big success in giving first empirical evidence in Vietnam on this matter. Data are collected through the survey into housing projects in Ho Chi Minh and Ha Noi city, which are the two largest cities in Vietnam.įindings: The findings reveal that the hedonic pricing model can be applied to estimate house price in Vietnam’s housing market. Based on this, the article adopts the Ordinary Least Squares (OLS) regression in combination with robustness statistics in the model estimation, so the estimated results on house price are reliable and able to be widely applied. Purpose: The article applies the hedonic pricing model to estimate house price in the housing market of Vietnam, which is a country with a fledgeling housing market, so the study is expected to bring interesting findings.ĭesign/Methodology/Approach: By applying the hedonic pricing model, most of the previous studies have reported that house price is significantly influenced by the characteristics of the house itself, its location and surrounding facilities.
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