Explaining Property Values: Quantitative evidence from Sweden

This paper describes progress in developing a property value module for a dynamic spatial microsimulation model called SVERIGE (System for Visualising Economic and Regional Influences Governing the Environment). It suggests using a hedonic price framework for estimating the value of residential property at different locations. The paper discusses the rationale for developing a property value module and problems encountered in specifying its equation(s). Determinants of property value are divided into several categories, including: (1) dwelling features, (2) land attributes, (3) neighbourhood characteristics, (4) regional or residential market features, and (5) public policy. The paper reports preliminary estimates of hedonic price equations for Sweden, with particular attention to geographical sources of variation in property values. It concludes with a discussion of ways the property value module might interact with other modules within the microsimulation model.