Appropriate Valuation of Housing Using a Hedonic Price Function and Disclosure of Information

Abstract

This paper proposes a method of valuation of housing using a hedonic price function, which leads to pareto optimal allocation in the housing market. The real theoretical prices of houses can be calculated by regression of the hedonic price function and substitution of attributes and quality-adjusted price index in the estimated equation. We show how to remove analytical error in this process. To realize this appropriate method of valuation of houses, information to be disclosed is estimated equation of hedonic price function, parameter to calculate the real theoretical prices of houses and the attributes and the offer prices of houses. The method of valuation of housing proposed in this paper will contribute to the market of used houses and newly-buillt houses in the region.