Price-contour-based spatial dummy variables for segmenting market in the geographic information system assisted hedonic modelling of residential property prices
Dummy variable has been traditionally used to discriminate one sub-market against the other in the property market analysis. It is basically used to analyse various phenomena that have spatial influencesonthesesub-markets.Thispaperdiscusses the use of price-contour based spatial dummy variables for delineating urban residential sub-markets in the prediction of residential property values. Geographic Information System (GIS) is used to create price contours and these contours are used as a basis for creating spatial dummy variables representing sub-markets. These sub-markets are then included in the hedonic regressions to predict the prices of residential units in various urban sub-markets in the study area. The attribute and spatial data for the analysis are analysed using ArcView 3.1. The results show that GIS integrative capability to analyse the physical, locational, socio-demographic, economic, and market factors helps to demarcate the residential sub-markets within a particular urban area and this has improved price predictions
