Eres : Digital Library : Works

Paper eres2012_317:
The effect of zip-code image and renovation on the prices of apartments in old residential multi-dwelling buildings

id eres2012_317
authors Mikael Postila and Ari Laitala
year 2012
title The effect of zip-code image and renovation on the prices of apartments in old residential multi-dwelling buildings
source 19th Annual European Real Estate Society Conference in Edinburgh, Scotland
summary In a recent research paper it has been claimed, that the plans nor the completion of major renovations won’t affect fully the sales prices on the market in Finland. Our goal in this study is twofold. Firstly, our intention is to check whether the discrepancy between renovation costs and apartment prices really exists. Secondly, we try to quantify the renovation potential for various sub-markets. As the models are planned to be used also for real life decision making, multivariate regression model is chosen for the tool of choice. Even though it isn’t as efficient as some spatial econometric tools, it is understandable for most practitioners, who often have doubts on models they don’t understand and see as ‘black boxes’ from their point of view. The dataset used for the study is comprised from Oikotie.fi multiple listing service and Statistics Finland data. During the first phase of the study we have constructed a multivariate hedonic regression models using same variables and similar functional form for 40 urban regions in Finland. One of the explanatory variables is quality, which is represented by using 3 dummy variables. The elasticity varies between cities, larger and more expensive cities having smaller elasticity. Since the renovation costs are somewhat similar across the country this indicates that the monetary difference between the classes of different building and apartment quality levels would be roughly the same. In the second stage of the study we’re trying to verify the results by replicating the 1st stage research on zip-code level and for individual residential buildings. At the same time we are testing the explanatory power of various zip-code, or sub-zip-code specific socio-economic and demographic variables as well as image (e.g. security, service level perception) factors.
series ERES:conference
type normal paper
email Mikael.Postila@oravafunds.com
discussion No discussions. Post discussion ...
ratings
session Parallel Session A7
last changed 2014/10/21 21:51
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