Abstract
Abstract This study proposes an innovative methodology, named Repeat Appraised Price Model (RAV), useful for determining the price index numbers for real estate markets and the corresponding index numbers of hedonic prices of main real estate characteristics in the case of a lack of data. The methodological approach proposed in this paper aims to appraise the time series of price index numbers. It integrates the principles of the method of repeat sales with the peculiarities of the Hedonic Price Method, overcoming the problem of an almost total absence of repeat sales for the same property in a given time range; on the other hand, the technique aims to overcome the limitation of the repeat sales technique concerning the inability to take into account the characteristics of individual properties.
Highlights
Buyers and sellers, it is important to be aware of price trend levels in a given geographical area to know and predict the dynamics of market prices and the phase of the real estate cycle
Where: ̅, ̅ ..., ̅ are the average prices detected in sub-sample t for the year under consideration; ̅ is the price of a virtual ordinary property with known and constant characteristics for each investigated year; xji, with indexes j=1,2,...,m and i=1,2,...,n, are the numbers of considered real estate features for the examined properties which are a part of the sub-sample for the given year; x0i represents a characteristic of the virtual property which is the same for each year
This paper proposed an operational methodology designed to overcome the problem of the lack of data, of those relating to repeat sales, indicating a procedure for the construction of prices index numbers for the real estate market
Summary
Buyers and sellers, it is important to be aware of price trend levels in a given geographical area to know and predict the dynamics of market prices and the phase of the real estate cycle These trends can be explained through information arising from knowledge of real estate prices, and the analysis of these values (recorded over time) is useful in creating time series of index numbers, which are numerical indicators helpful for understanding the profitability of land phenomena in different market segments (CASE and QUIGLEY 1991). In their general meaning, the index numbers are useful indicators for making predictions, taking decisions, and studying price movement trends in various sectors of the economy. We have to underline that the proposed methodology can be used for real estate types other than residential, upon properly considering the corresponding features and their hedonic prices
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