Hedonic Model for Finnish Housing Rents and a comparative analysis for two towns

Asko Miettilä

ERES from European Real Estate Society (ERES)

Abstract: In the analysis I rely on the assumptions made by Rosen (1974) and use the theory of hedonic price function on Finnish rental housing markets [FRM] to estimate hedonic prices for its characteristics. The primary objective in this paper is to study the differences in the rental price formation between the two sub-markets (Free and ARAVA market). The second objective is to estimate the inference between age of the dwelling units and rents. Thirdly preliminary models about Finnish rental total data in 1999 are being estimated. The estimation was carried out by OLS. The results of the total Finnish rental market suggest that the size of the building, the number of inhabitants and the form of finance are the most important explanatory factors in rent formation. Also the technical amenities of the dwellings (available for the analysis) get significant coefficients. The most interesting results also suggest that the explanation power of the age of the building could be compensated by the technical features of the flat and the building ñ such as building material, sauna, balcony, air conditioning, elevator and heating system. The conclusion is that age is not necessarily, as such, relevant, but the different characteristics of the buildings of different age. If this would be true in general the results could be used in planning and investment decisions.

JEL-codes: R3 (search for similar items in EconPapers)
Date: 2001-06-01
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