Spatial Heterogeneity in Danish Urban Land Prices: The Expansion Method Philosophy and Variable Autocorrelated Residuals

ABSTRACTWestern governments often attempt to regulate the use of privately owned urban land, while still relying on private landowners and developers to initiate development. This requires restrictions on the ways owners can develop their land, which restricts supply and increases land prices. The incentive of landowners to maximize the value of their land leads them to resist any restrictions on their right to develop.Different countries have responded to these difficulties in achieving land use policy objectives in different ways. In the United States, and to a lesser degree Australia, the private market largely determines the way cities grow and land use planning has only a minor influence. In Sweden and the Netherlands most land for development is purchased by the municipalities who also initiate the development. Britain, with strong land use controls, still relies on private development initiatives. Those controls restrict the land available and contribute to high land prices.

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PREDICTING URBAN LAND PRICES: A COMPARISON OF FOUR APPROACHES

International Journal of Strategic Property Management ◽

10.3846/1648-715x.2008.12.217-236 ◽

2008 ◽

Vol 12 (4) ◽

pp. 217-236 ◽

Cited By ~ 10

Author(s):

Marko Hannonen

Keyword(s):

Least Squares ◽

House Price ◽

Predictive Testing ◽

Ordinary Least Squares ◽

Urban Land ◽

Least Squares Estimation ◽

Local Regression ◽

Land Prices ◽

Structural Time Series ◽

Mm Estimation

This paper investigates forecasting accuracy of four different hedonic approaches, when vacant urban land prices are predicted in local markets. The investigated hedonic approaches are: 1) ordinary least squares estimation, 2) robust MM‐estimation, 3) structural time series estimation and 4) robust local regression. Post‐sample predictive testing indicated that more accurate predictions are obtained if the unorthodox methods of this paper are used instead of the conventional least squares estimation. In particular, the predictive unbiassness can significantly be improved when using the unconventional hedonic methods of the study. The paper also studied the structure of urban land prices. The most important attribute variables in explaining land prices were permitted building volume, house price index, northing and easting. The influence of parcel size variable and different indicator variables on land prices were much weaker. Santrauka Nagrinėjama, kokiu tikslumu keturi skirtingi hedonistiniai metodai prognozuoja laisvų žemės plotų kainas vietinėse miestų rinkose. Nagrinėti tokie hedonistiniai metodai: 1) mažiausiųjų kvadratų metodas, 2) daugybinių modelių vertinimas, 3) struktūrinių laiko eilučių vertinimas, 4) lokalinė regresinė analizė. Post-sample prognostinis testas parodė, kad tikslesnės prognozės gaunamos taikant netradicinius šiame darbe nurodytus metodus, o ne įprastą mažiausiųjų kvadratų metodą. Taikant netradicinius hedonistinius tyrimo metodus, gali gerokai padidėti prognozių nešališkumas. Darbe nagrinėta ir žemės kainų mieste struktūra. Aiškinant žemės kainas iš būdingų kintamųjų svarbiausi buvo leidžiamas pastato dydis, būsto kainų indeksas, sklypo padėtis. Sklypo dydžio kintamasis ir įvairių rodiklių kintamieji žemės kainoms turėjo daug mažesnę įtaką.

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