Hedonic Pricing of Housing Quality Attributes in Ilorin
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Date
2020-08
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Publisher
Parvenu Technologies
Abstract
The overall assumption of the hedonic price model (HPM) with respect to real estate is that house prices are affected by various variables and the price of the real estate is determined by certain characteristics. The hedonic pricing allows inferring on the value of environmental good by observing actual behaviour of individual on related market. The study of hedonic property pricing has not received the needed attention in Nigeria property market. This has led to the problem of prioritization the property attributes. This study therefore analysed the rental price of 800 properties in Ilorin metropolis with a view to identifying the property attributes with higher price. The study employed hedonic price model to decompose the properties and determine their individual prices. The first generalized hedonic regression model showed a dual role of more than two attributes with poor variance inflation factor characterized in the multi-collinearity test and the second model termed stepwise hedonic regression provided a correct estimate with total absence of multi-collinearity and was used to determine the price of the variable attributes. The finding revealed that building size, age, garage, swimming pool, access road and in-house water have about 73.5% explanatory power in rental price variation. The implicit prices of the significant attributes such as building size, age, garage, swimming pool, access road and in-house water were N89,908, 28,561, N19,097, N29, 913, N71,318 and N61,178 respectively. The study therefore concludes that every stakeholder in property market in Ilorin metropolis should consider building size, age, garage, swimming pool, access road and water supply as indispensable attributes in the property markets as they command a significant price of the properties in the area.
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Keywords
housing attributes, rental pricing, hedonic modelling, Nigeria
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