Applying the beta coefficient to the Polish housing market

The beta coefficient is widely used in company valuation. According to the assumptions of the CAPM, thanks to the beta, you can set the cost of equity and thus the discount rate in income valuation models. Similarly, in the real estate market, if you want to valuate the property by income method, a discount rate should be known. This rate can be estimated by knowing the beta coefficient for property market. Unfortunately, the estimation of this coefficient is difficult, since there is no known index of such a broad market that would contain both industrial investments and all others, such as real estate investment. Therefore, the author decided to develop a method for calculating the beta in the housing market. This is the first step towards the development of the beta calculation methodology in the commercial real estate market.The aim the article is to estimate the beta coefficient for the residential property market in Poland. The author has set the hypothesis that the mean values of the beta coefficients calculated on the hedonic index on the secondary housing market are statistically significant equal to the average values of the beta coefficient for the WIG index, the broad Stock market Index on the Polish stock market. To verify the hypothesis and consequently achieve the goal of the work, the author used the data analysis followed by the use of one-way ANOVA.The development of a beta counting methodology is the original contributor's contribution to science. In the Polish market there is no adequate method and asset appraisers apply the beta directly taken from the stock market. In addition, this work is the first phase of research that will lead to the development of a methodology to calculate the beta coefficient in the commercial real estate market.