A Critical Review of Literature on the Hedonic Price Model

International Journal for Housing Science and Its Applications 27 (2), 145-165, 2003

18 Pages Posted: 4 Jun 2012 Last revised: 9 May 2016

See all articles by K.W. Chau

K.W. Chau

The University of Hong Kong - Ronald Coase Centre for Property Rights Research - Economics

T. L. Chin

affiliation not provided to SSRN

Date Written: June 12, 2002

Abstract

The hedonic price model, derived from Lancaster’s (1966) consumer theory and Rosen’s theoretical (1974) model, has been used extensively in the scientific investigation of various aspects of housing markets. This paper reviews the literature on the application of the hedonic price model. Theoretical background, major empirical issues, inherent limitations, and advantages are discussed. The applicability of the model to the housing market is critically examined. Previous empirical studies of the effects of locational, structural, and neighbourhood-related housing attributes on property prices are identified and reviewed. A list of common housing attributes used in the estimation of the hedonic price models and their effects on housing prices are identified. Although the set of prices influencing characteristics is different across different markets, and the variables included in the hedonic price model are also constrained by the availability of data, this list should serve as a useful basic checklist for the application of the hedonic price model in different markets.

Keywords: Hedonic Price Model, Housing Attributes, Locational Attributes, Structural Attributes, Neighbourhood Attributes

JEL Classification: B49, R20

Suggested Citation

Chau, Kwong Wing and Chin, T. L., A Critical Review of Literature on the Hedonic Price Model (June 12, 2002). International Journal for Housing Science and Its Applications 27 (2), 145-165, 2003. Available at SSRN: https://ssrn.com/abstract=2073594

Kwong Wing Chau (Contact Author)

The University of Hong Kong - Ronald Coase Centre for Property Rights Research - Economics ( email )

Ronald Coase Centre for Property Rights Research
Pokfulam Road
Hong Kong
Hong Kong
(852)28592128 (Phone)
(852)25599457 (Fax)

T. L. Chin

affiliation not provided to SSRN ( email )

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