Open AccessAn Empirical Method for Decomposing the Contributions of Land and Building Values to Housing Value
Author(s) -
K. Pan,
Hsiao Jung Teng,
Lin Shi,
Yizong Cheng
Publication year - 2021
Publication title -
journal of the asian real estate society
Language(s) - English
Resource type - Journals
ISSN - 1029-6131
DOI - 10.53383/100326
Subject(s) - value (mathematics) , land value , database transaction , econometrics , agricultural economics , statistics , economics , mathematics , computer science , programming language
This paper develops an empirical method that uses two separate housing relatedcomponents to estimate housing value: land and building. The artificial neural network(ANN) technique is used to iteratively solve for two hedonic models simultaneously byminimizing the difference in the observed total value and the sum of the estimated landand building values. This method enables one to objectively separate housing value intoland and building components. Using actual sales transaction data from Taipei City, weestimate the land value as a share of the total housing value. The results show that theland value accounts for a higher share with older properties. The share of the landvalue of low-rise buildings tends to be higher than that of high-rise buildings. Theshare of the land value can deviate by 20 percentage points between more or lessexpensive housing communities within Taipei City.