Estimating location values of agricultural land

Georg Helbing, Zhiwei Shen, Martin Odening and Matthias Ritter

No 2017-002, SFB 649 Discussion Papers from Humboldt University Berlin, Collaborative Research Center 649: Economic Risk

Abstract: "Bodenrichtwerte" reflect the average location value of land plots within a specific area. They constitute an important source of information that contributes to price transparency on land markets. In Germany, "Bodenrichtwerte" are provided by publicly appointed expert groups (Gutachterausschüsse). Using empirical data from Mecklenburg-Western Pomerania between 2013 and 2015, this article examines the relation between 'Bodenrichtwerten' and statistically determined location values. It turns out that 'Bodenrichtwerte' tend to underestimate location values of arable land by 11.5 percent on average. This underestimation can be traced back to the pronounced increase of land prices in the observation period. As an alternative to the expert-based determination of location values, we suggest a nonparametric smoothing procedure that rests on the Propagation-Separation Approach. The application of this data-driven procedure achieves an accuracy comparable to that of official "Bodenrichtwerte" at the one-year ahead prediction of location values without the requirement of expert knowledge.

Keywords: land value; adaptive weight smoothing; agricultural land markets; propagation-separation approach; PSA (search for similar items in EconPapers)
JEL-codes: C14 Q15 R39 (search for similar items in EconPapers)
Date: 2017
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Citations: View citations in EconPapers (1)

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Related works:
Journal Article: Estimating Location Values of Agricultural Land (2017)
Working Paper: Estimating Location Values of Agricultural Land (2017)
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:sfb649:sfb649dp2017-002

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