Determinants of housing prices in Baku: empirical analyses

Purpose - This paper aims to reveal major factors affecting housing prices (flats and houses) in Baku, the capital of Azerbaijan Republic. Design/methodology/approach - Based on cross-sectional data set of 497 flats and 443 houses, polynomial regression models are estimated for flats and houses separately. Regression models are estimated by using ordinary least squares. Findings - Location, largeness, repair level and existence of bill of sale are major price determinants for flats. For houses, number of rooms also matters. Findings reveals that houses are land intensive (more floors, less land area) toward city center, and vice versa. Price difference due to existence of bill of sale diminishes significantly toward the surrounding areas. Research limitations/implications - The data set represents view of sellers and does not take into consideration price bargaining in time of sale; probability of information asymmetries exists which not could accounted for, and urgency of sale is not considered. Practical implications - Estimation results can be used for housing valuation by real estate market participants and investors. Social implications - Research findings reveal importance of bill of sale as a major price determinant and expected to attract policymakers’ attention to solve such a big social problem. Additionally, models can be based for price estimations in Baku housing market. Originality/value - The study contributes to the literature by empirically analyzing housing market in Baku, Azerbaijan. Research produces new practically valuable findings.