Mix Adjustment divides the property market into 'cells'. Each cell contains properties with similar characteristics in similar locations. House price data can then be allocated to the different cells in order to assess the average price of each cell, i.e. of properties with different characteristics. After the mean values have been weighted, the average cell price is the mix-adjusted price.
Example: This method solves the problem of the change in property sales composition in a similar way to the Hedonic Regression model. There would be a cell for detached houses as well as one for terraced ones. This way, an increasing number of sales of detached houses would not influence the mean price of each cell.
- As noted in the discussion of the hedonic regression model, all property characteristics have to be taken into account to guarantee accuracy.
- Differences in weighting can have a substantial effect on the outcome of the analysis (see below).