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http://dx.doi.org/10.29214/damis.2018.37.1.009

Determinants of Apartment Prices in Busan: A Spatial Quantile Regression  

Yoon, Jong-Won (Dept. of Business Administration, Changwon National University)
Park, Sae-Woon (Dept. of Business Administration, Changwon National University)
Jeong, Tae-Yun (Dept. of Business Administration, Changwon National University)
Publication Information
Management & Information Systems Review / v.37, no.1, 2018 , pp. 155-175 More about this Journal
Abstract
Lots of previous researches on determinants of apartment prices in Korea consider spatial dependence while few studies regard endogeneity of spatial lag by adding a spatial lag to an OLS regression. Thus, this study intends to include this spatial lag in its analysis of determinants of apartment price in Busan by using a two-stage quantile regression. The empirical results are : the coefficient of spatial lag variable is more than 0.5 and is statistically significant at 1% level. From this result we can confirm that the effect of the price of nearby apartment on that of another apartment is very big. We also find that apartment buyers prefer larger size, height in both the total floors and living floor, south-facing living room with a ocean view, and proximity to metros, high school and coast. Unlike our expectation, however, mountain view is less favored than building view, which we can guess is because apartments with mountain views are mostly located in the low-priced apartment area where some of their living rooms face north. Quantile regression also explains the effect of hedonic characteristics on apartment price better than OLS estimation. For instance, the effect of south facing living room variable on the price is twice larger in high-price apartments than in low-price counterparts. And the effect of vicinity to the coast or the ocean is ten times bigger in high priced apartments.
Keywords
Spatial lag model; Spatial dependence; Apartment prices; Two-stage regression; Quantile regression;
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