Intangible Factors Influencing the Negotiated Prices of Family Houses in Brno

Abstract

The article deals with issues related to real estate prices, specifically the influence of selected intangible factors on the price of family houses. For the purpose of this article, we understand intangible factors as those factors that do not originate from the property itself, but are derived from its location or its surroundings. Tangible factors are those related to the size of the family house and the land, its design and condition, etc.

In order to identify relevant factors, a search of publications, including foreign ones, was used, as well as information from previously conducted research and sociological studies dealing with housing in Brno. The archive of expert opinions of the Institute of Forensic Engineering was also an inspiring source of information. An analysis of publicly available advertisements of houses was carried out in order to find out what features advertisers consider essential when describing the properties on offer.

The area of interest of the presented article is the city of Brno. The reason for the choice of this location is the expert practice of the authors of the article in the field of real estate valuation, especially in this area. The final database contains 147 family house sales. A total of twelve intangible factors are considered in the database. Tangible factors are also included in the analysis and were chosen to aptly characterize the single-family home.

The focus of the paper is a multivariate linear regression model with the OLS (ordinary least squares) estimation method describing the dependence of price on explanatory variables (referred to as factors in this paper). After confronting the obtained data with the regression model, the hypothesis that at least one intangible factor is statistically significant for the price of family houses at the chosen level of significance was confirmed. It also confirmed the hypothesis that the intangible factors, in the sum of their intensity, are able to explain at least 10% of the price of a family house.