Economics at your fingertips  

Housing price prediction: parametric versus semi-parametric spatial hedonic models

José-María Montero (), Román Mínguez and Gema Fernández-Avilés
Additional contact information
José-María Montero: University of Castilla-La Mancha
Román Mínguez: University of Castilla-La Mancha
Gema Fernández-Avilés: University of Castilla-La Mancha

Journal of Geographical Systems, 2018, vol. 20, issue 1, 27-55

Abstract: Abstract House price prediction is a hot topic in the economic literature. House price prediction has traditionally been approached using a-spatial linear (or intrinsically linear) hedonic models. It has been shown, however, that spatial effects are inherent in house pricing. This article considers parametric and semi-parametric spatial hedonic model variants that account for spatial autocorrelation, spatial heterogeneity and (smooth and nonparametrically specified) nonlinearities using penalized splines methodology. The models are represented as a mixed model that allow for the estimation of the smoothing parameters along with the other parameters of the model. To assess the out-of-sample performance of the models, the paper uses a database containing the price and characteristics of 10,512 homes in Madrid, Spain (Q1 2010). The results obtained suggest that the nonlinear models accounting for spatial heterogeneity and flexible nonlinear relationships between some of the individual or areal characteristics of the houses and their prices are the best strategies for house price prediction.

Keywords: Housing prices; Semi-parametric spatial hedonic models; Generalized additive models; Penalized splines; Mixed models (search for similar items in EconPapers)
JEL-codes: C21 R10 R31 (search for similar items in EconPapers)
Date: 2018
References: View references in EconPapers View complete reference list from CitEc
Citations: Track citations by RSS feed

Downloads: (external link) Abstract (text/html)
Access to full text is restricted to subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link:

Ordering information: This journal article can be ordered from
http://www.springer. ... ce/journal/10109/PS2

Access Statistics for this article

Journal of Geographical Systems is currently edited by Manfred M. Fischer and Antonio Páez

More articles in Journal of Geographical Systems from Springer
Bibliographic data for series maintained by Sonal Shukla ().

Page updated 2019-04-07
Handle: RePEc:kap:jgeosy:v:20:y:2018:i:1:d:10.1007_s10109-017-0257-y