The relative importance of structural and locational effects on apartment price variations in a medium-sized German city

Abstract

Beside the specific object attributes, it is often stated that location is the fundamental determinant for real estate prices. But how important is location regarding to other price determinants like size or age of an apartment in a relative point of view? Our results suggest that the relative importance of location parameters depends on the specification of a hedonic model. Locational effects do not capture the essence of an apartment value in every case. It has little impact on price and strong impact on price per sqm variations. Hence the role of location depends on the model specification.