Testing Housing Price Drivers in Santiago de Chile: A Hedonic Price Approach

Author: Francisco Vergara-Perucich ID

Hedonic modelling is an empirical analysis technique that is widely used to review the housing market and unpack the main determinants of price. A correct determination of housing price drivers allows a weighted prediction of the value of each dwelling for sale or rent. This paper reviews the fundamental determinants of housing prices that have been published in the literature to see which ones have a better predictive fit for the case of the housing market in the city of Santiago, Chile. From a record of 456,000 property transactions, a dataset composed of 11 explanatory variables is elaborated. Through a semi-logarithmic regression, 4 variables that contribute to explaining the formation of housing prices in Santiago, Chile, are identified. The results indicate that the socioeconomic characterisation of urban areas where housing is traded, the price of copper on the London Metal Exchange, the mortgage interest rate, the age of residential buildings are the main drivers for the main drivers of prices in Santiago. Given the crisis of access to housing in Chile, the article provides relevant information for decision-makers in housing policy.

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Document Type
article
ISSN
2336-2839
Volume / Issue
10 / 2
Pages
44-57
https://doi.org/10.13060/23362839.2023.10.2.558
Date of publication
24.11.2023
Keywords:
housing economics , housing in developing countries , urban policy and planning , land markets and housing policy

Cite this article

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Vergara-Perucich, F. 2023. ‘Testing Housing Price Drivers in Santiago de Chile: A Hedonic Price Approach.’ Critical Housing Analysis 10 (2): 44-57. https://doi.org/10.13060/23362839.2023.10.2.558