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Methodology | Table of Contents | Hedonic Regression |  |
The simple average of transaction prices is the mean price of all houses sold in a certain period of time. This method of analysis, used by Land Registry, is suitable for assessing the total value of turnover in the property market.
The main problem with this method is that it does not take into account differing transaction times for differently priced properties. If, for example, the number of sales of (more expensive) detached houses rises, the simple average will record an increase in property prices, although the prices of individual properties have not actually changed.
Therefore, the data must be standardised in order to neutralise the effect of variations in the sample data.
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Methodology | Table of Contents | Hedonic Regression | |
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