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Time, space and hedonic prediction accuracy evidence from the Corsican apartment market

Author

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  • Yuheng Ling

    (Laboratoire Lieux, Identités, eSpaces et Activités (LISA))

Abstract

In this study, we propose a hedonic housing model to address spatial and temporal latent structures simultaneously. With the development of spatial econometrics and spatial statistics, economists can now better assess the impact of spatial correlation on house prices. How- ever, the simultaneous handling of spatial and temporal correlation is still under development. Since spatial econometric models are limited to account for two kinds of cor- relation simultaneously, we propose using a hierarchical spatiotemporal model from spatial statistics. Based on a Bayesian framework and a stochastic partial differential equation (SPDE) approach, the estimation is carried out via INLA. We then perform an empirical study on apartment transaction prices in Corsica (France) using the proposed model. The empirical results demonstrate that the prediction performance of the hierarchical spatiotemporal model is the best among all candidate models. Moreover, the hedonic housing estimates are affected by spatial effects and temporal effects. Ignoring these effects could result in serious forecasting issues.

Suggested Citation

  • Yuheng Ling, 2019. "Time, space and hedonic prediction accuracy evidence from the Corsican apartment market," Working Papers 013, Laboratoire Lieux, Identités, eSpaces et Activités (LISA).
    • Handle: RePEc:lia:wpaper:013
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    File URL: https://umrlisa.univ-corse.fr/RePEc/lia/pdf/WorkingPaper13.pdf
    File Function: First version, 2019
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    Citations

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    Cited by:

    1. Patrick Gourley, 2021. "Curb appeal: how temporary weather patterns affect house prices," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 67(1), pages 107-129, August.

    More about this item

    Keywords

    Hierarchical spatiotemporal model; Hedonic price model; INLA-SPDE; Apartment market;
    All these keywords.

    JEL classification:

    • C11 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Bayesian Analysis: General
    • C14 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Semiparametric and Nonparametric Methods: General
    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models
    • R31 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Housing Supply and Markets

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