(A) study on the estimation of the structural hedonic price model of urban housing markets in Korea

Abstract

There are some distinct features in the housing unit such as heterogeneity, locational adherance and indivisibility, unlike other goods, which are main bottlenecks in analyzing housing market according to neo-classical market analysis. Hedonic price theory and/or household production theory offer good theoretical backgrounds to solve these problems. More recently S. Rosen (1974) developed a theoretical model for the structural analysis of hedonic prices. His model recognizes that the market prices of complex goods such as housing are jointly determined by consumer evaluations of each of the individual services provided and by the producer``s offering price for each services. In this dissertation, a hedonic price model following Rosen are empirically tested with three steps. First, from the components of the housing units the four factors (quality, interior size, locational characteristics and exterior size) are identified from factor analysis technique. Second, to calculate the quality of each factor, factor score were used and from the regression result of total housing price on quadratic formed housing factors, factor prices were calculated by performing partial derivative dP/dZ$_i$ for each factors at each geographical area. Finally, to identify demand and supply function shifters, income, number of household, development status, population density of the area, locational characteristics, housing supply ratio and housing type were used and the six equations system of QUALITY, INSIZE, and EXSIZE which are constituting the housing unit were estimated using three stage least squares method. Consequently, generally accepted results are obtained. As data, Survey on Housing Market and Its Demand collected by KRIHS is August, 1982 and Census of Population and Housing by EPB in 1981 were used.