Listing price estimation of flats in KwaZulu-Natal Coastal sub-markets: a novel econometric model.

Abstract

Abstract The aim of this study was to derive a hedonic price function for flats within KwaZulu-Natal coastal sub-markets, filling a gap in residential hedonic price studies in South Africa. This study set out to develop a model to estimate listing prices of flats located in sub-markets along the KwaZulu-Natal coast. Identifying the appropriate distribution of listing prices and a set of statistically significant structural and locational attributes was paramount in achieving the research objectives. This was accomplished through a set of research hypotheses that were formulated and tested through rigorous statistical techniques. A generalised linear model based on the gamma distribution and log-link function was developed as a novel alternative to derive a hedonic price function for a segment of the residential property market in KwaZulu-Natal. The generalised linear model based on the gamma distribution and log-link function proved to be a more effective model for this research problem than the traditional ordinary least squares modelling approach. Based on the findings, a software application was developed to disseminate the results of the generalised linear model for potential commercial use by real estate businesses, bridging the gap between academia and business.