Housing Market in Malaga: An Application of the Hedonic Methodology

Results

Table 2 shows the result of the final regression carried out in accordance with the
criteria described, i.e. a hedonic model of house purchasing prices in Malaga city for the year
2003.

All the estimated coefficients have the expected signs. Therefore, in the market
equilibrium represented by this hedonic price function an additional unit of square meters and
bathrooms is assessed positively (but at a diminishing rate as indicated by the coefficients of
the same variables when they are squared) as well as more rooms.

It is also positive for the dwelling to be located in either district 2 or 10, close to the
center of town and to the seaside, and be a detached house or an attic flat. Similarly, a good
state of preservation plus private parking, exterior windows with double glazing, and built-in
wardrobes, as well as elevators and a caretaker¹ make the dwellings more attractive to the
market. Small dwellings, such as studio flats or apartments, ones that are old or have poor
natural light, which are in a building with a large number of floors, located in districts 4, 5, 6 or 7,
and which are not well-preserved are the least valued by the market.

Furthermore, all coefficient estimations have statistically significant values with a 95%
confidence level or higher, except for the variables: "distance to downtown" with 90.55%
confidence level, "attic" with 92.72% and "double glazing" with 71.92%. These variables were
kept in the final regression because they provide individual significance to the explanatory
capacity of the model. On the other hand, Table 2 also shows the standardized coefficients² for
independent variables for comparison purposes. These estimations make it possible to indicate
the relative importance of each variable in the regression. Thus, it is clear that the variable
"surface area" is essential for house pricing, followed by "number of bathrooms".

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