Abstract

This research investigates the residential real estate market in an emergent European country, Romania. Using data from approximately 300 sales transactions and another 300 nationally relevant rent transactions conducted between midyear 2010 and midyear 2011, the real estate market prices and rental prices have been processed using statistical techniques such as the General Linear Model, in order to identify the characteristics of properties with a significant influence over the analyzed context. The results show that heterogeneous real estate location related and physical characteristics such as type of real estate, existence of an elevator, thermal insulation, finishing works and floor area are significant variables that influence real estate prices in Romania. Moreover, the paper offers a database in the form of descriptive statistics for asset pricing, in this case residential single-family properties, the same as for the Gross Income Multiplier. This represents a starting point in developing a statistical basis on which future studies can attempt to explain the pricing differences observed in real estate. Key words: Emerging market, real estate, appraisal, influential factors.

Highlights

  • Real estate market represents the largest market in developed European and worldwide countries, estimated to 30% - 40% of the value of all the underlying physical capital (Fabozzi et al, 2010)

  • Using data from approximately 300 sales transactions and another 300 nationally relevant rent transactions conducted between midyear 2010 and midyear 2011, the real estate market prices and rental prices have been processed using statistical techniques such as the General Linear Model, in order to identify the characteristics of properties with a significant influence over the analyzed context

  • In this paper we focus on residential real estate, at the level of the individual property, within a case study conducted on the Romanian real estate market, a European market

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Summary

Introduction

Real estate market represents the largest market in developed European and worldwide countries, estimated to 30% - 40% of the value of all the underlying physical capital (Fabozzi et al, 2010). In recent years this has been the case in emergent countries, where the real estate bubble sometimes exceeded the levels attained in developed countries. Real estate appraisals have been requested in recent years to secure (mortgage) financial debts, assets financial reporting, tax and/or insurance estimations, sales transactions and estate planning situations. The quality of mortgage valuation is critical; correlated with the possibility of auction sale in case of default and, in a depressed market, it may help in seeking policy solutions to distress the banking industry, as shown for Nigeria in the study of Aluko (2007)

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