Opportunities to use NCA (Necessary Condition Analysis) to analyse prices in the housing market

Radosaw Cellmer and Andrzej Muczynski

ERES from European Real Estate Society (ERES)

Abstract: Necessary Condition Analysis (NCA) is a new research method increasingly used in various social, medical and technical science research fields. With conventional regression-based research methods, the research problem is identifying causal relationships in an equation determining the effect of explanatory variables on the dependent variable. On the other hand, NCA uses the logic of necessity to create theoretical causal statements. This means stating that if a certain level of a condition is not present, a certain level of an outcome will also not be current, with other factors unable to compensate for the missing condition.The research presents the possibility of using the NCA method to analyse the conditions for achieving a certain level of property prices. For this purpose, relevant hypotheses derived from the logic of necessity are proposed, and ways of testing them are presented. The necessity condition relates to the presence of a certain level of quantitative and qualitative property characteristics necessary to achieve a price effect. This takes into account the fact that the relationship between property characteristics and prices is sometimes linear.The research was based on data on residential property prices in selected Polish cities. As a result, several property characteristics were established, the appropriate level of which is a prerequisite for the property price to reach a certain level in a given local market.As a result of the research, it was discussed whether applying the NCA method could provide new information to market participants (developers) and decision supporters (managers, valuers, etc.).

Keywords: casuality; housing; necessary condition analysis; Real Estate Market (search for similar items in EconPapers)
JEL-codes: R3 (search for similar items in EconPapers)
Date: 2024-01-01
New Economics Papers: this item is included in nep-ure
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