Track: Modeling and Simulation

Abstract

The property attributes – physical, neighbourhood and location attributes – are incorporated into Hedonic Pricing Models (HPM) to determine property prices or evaluate the relative contribution of each attributes to the property prices. However, the findings of most studies on the influence of the property attributes on prices have been diverse. The directionality and quantum of influence are not static rather dynamic. Therefore this paper reviewed previous hedonic pricing models studies and summarise the influence of property attributes on price. The review found that the magnitude and directionality of the property attributes influence on prices are not uniform but rather diverse depending on the property type, situations and consumer preference. The divergence of findings was found to be more common in the physical attributes and location attributes. The findings on neighbourhood attribute are relatively more uniform. This is because most of the neighbourhood attributes are both positive or negative externalities, and deals with the overall society rather than a single property. The review shows that most of the hedonic pricing model applications are in the housing market with fewer applications in the commercial property market. The paper recommends more application of the hedonic pricing model in the commercial property market.