Scandinavian Working Papers in Economics

Working Papers in Economics,
University of Bergen, Department of Economics

No 06/05: Housing price gradients in a geography with one dominating center

Liv Osland (), Inge Thorsen () and Jens Petter Gitlesen ()
Additional contact information
Liv Osland: Stord/Haugesund University College, Postal: Bjørnsonsgt. 45, N-5528 Haugesund, Norway
Inge Thorsen: Stord/Haugesund University College, Postal: Bjørnsonsgt. 45, N-5528 Haugesund, Norway
Jens Petter Gitlesen: University of Stavanger, Postal: N-4036 Stavanger, Norway

Abstract: We primarily focus on explaining housing prices and predicting housing price gradients in a Norwegian region with one dominating center (Stavanger). For such a geography spatial separation can be represented in a hedonic regression equation by a function of traveling distance from the city center. Several functions are tested, and some alternatives provide both a satisfying goodness-to-fit, consistent coefficient estimates, and intuitively reasonable predictions of housing price gradients. Still, not all commonly used functions are recommended. Spatial autocorrelation is removed when the hedonic function is properly specified.

Keywords: hedonic regression model; housing attributes; functional representation of spatial separation; spatial autocorrelation; housing price gradient; capitalization

JEL-codes: R21; R31

29 pages, March 17, 2005

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