Universal Estimation Model for Secondary Housing Market: Looking for a Silver Bullet

<p>Despite the long history of development, hedonic pricing method for the housing market continues to be the leading evaluating method, and the various areas of its application do not lose interest among researchers, thereby encouraging the development of new estimation methods, and expanding the boundaries of the application of the method itself. However, there are not so many studies analyzing the Russian real estate market due to a short existence of a free real estate market. Nonetheless, this kind of papers can offer new insights and understanding of the situation of the &nbsp;city planning and changing its structure. In this study, based on freely available data, &nbsp;we analyze parameters in three Russian cities : Yekaterinburg, Novosibirsk, St. Petersburg by estimating regression models and incorporating tools of spatial econometrics to develop a universal model for estimating property in the secondary market. A lot of literature was reviewed to find out the most appropriate estimation techniques. Collected data for this research includes information about physical characteristics of all the objects and infrastructure &nbsp;properties for each of three cities. And the main part of the study depicts regression models and gives its analysis.<br />We found out that the optimal functional form is spatial error model, it allows to obtain unbiased estimates . We also propose a set of variables which must be included in a regression because it provides a high explanatory power of the model. The direction of influence of all of the estimated coefficients was also found out to be the same across all the cities. However, equivalence factors influence was not confirmed - in each city each factor has a different effect on the price of the apartment .</p>