Valuation Methods for the Housing Market: Evidence from Budapest

Kutasi, Dávid and Badics, Milán Csaba (2016) Valuation Methods for the Housing Market: Evidence from Budapest. Acta Oeconomica, 66 (3). pp. 527-546. ISSN 0001-6373

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Abstract

Abstract Different valuation methods and determinants of housing prices in Budapest, Hungary are examined in this paper in order to describe price drivers by using an asking price dataset. The hedonic regression analysis and the valuation method of the artificial neural network are utilised and compared using both technical and spatial variables. In our analyses, we conclude that according to our sample from the Budapest real estate market, the Multi-Layer Preceptron (MLP) neural network is a better alternative for market price prediction than hedonic regression in all observed cases. To our knowledge, the estimation of housing price drivers based on a large-scale sample has never been explored before in Budapest or any other city in Hungary in detail; moreover, it is one of the first papers in this topic in the CEE region. The results of this paper lead to promising directions for the development of Hungarian real estate price statistics.

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