Heterogeneity in Housing Attribute Prices: An Interaction Approach between Housing Attributes, Absolute Location and Household Characteristics

Coefficients of housing attributes in most hedonic specifications are held constant under the assumption that each attribute has one unique marginal price throughout the entire market area. However, there’s increasing evidence that the marginal prices of some key housing attributes do vary according to particular systematic patterns. In this paper, we employed expansion methods by incorporating both {X, Y} coordinates and buyer’s characteristics to examine the spatial and socio-economic heterogeneities in housing attribute prices within the Shenzhen, China housing market. The results provide strong evidence that the marginal prices of key housing attributes are not constant but vary with household profile and absolute-location context. Besides, it is strongly proved that spatial expansion method with {X, Y} coordinates is also practicable to property assessment and urban studies of China.