Abstract
This paper examines a specific segment of the housing markets from Central and Eastern European countries, namely the stock of flats in the urban area. With focus on Romania, we emphasize the improvements made by owners and authorities, aimed to enhance the quality of life and the maintenance of old blocks of flats; are highlighted some aspects regarding the cost of these improvements. In addition, the empirical section investigates whether and to what extent the improvements made to the flats and buildings have a significant effect on sale prices and rental prices. The marginal prices of these attributes are provided by hedonic pricing models, estimated in a generalized linear model framework; gamma and log-linear regression models perform in a similar way in terms of fit and prediction accuracy. The physical condition of the building and finishing works inside the flats, as variables of interest in our models, have a significant effect on sale and rental prices, but with different intensity. A common set of significant attributes, in the hedonic models for both sale and rental price, is suggested.
Highlights
Residential property accounts for a significant amount of homeowners’ wealth, representing an important asset for most of them
According to the same catalogue cited for the modernization of blocks, the finishing works cost about 37 Euro/ m2 functional area3, without VAT as an average for one or two-room flats.In the empirical section, we study the effect of thermal insulation, overall physical condition of the blocks of flats, and finishing works inside the flats on sale and rental prices, while drawing a comparison between the sale prices and the costs presented above
This paper examines a specific segment of the Romanian housing market, namely blocks of flats in the urban area
Summary
Residential property accounts for a significant amount of homeowners’ wealth, representing an important asset for most of them. Our primary objective is to investigate, through the hedonic pricing models, the effect of improvements made over time to the old blocks of flats To this end, we highlight specific features of these improvements, and some statistics that broadly describe the housing stock from the Romanian real estate market. Brouen and Kok (2011) estimate a hedonic regression for a large sample of residential dwellings from the Netherlands, considering, among other attributes, thermal and quality characteristics (central heating, insulation, exterior maintenance).
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