1# RECORD 2792b4c943809eb914728ff2391864089ea9f6852# TITLE: Determinants of Real Estate Prices in the Statutory City of Brno3# YEAR: 2018.0 VENUE: Acta Universitatis Agriculturae et Silviculturae Mendelianae Brunensis DOI: 10.11118/actaun2018660409914# AUTHORS: Vlastimil Reichel; Petr Zimcik5# PAGES: 9 CANDIDATE TABLE PAGES (1-based): []6# ABSTRACT: The real estate market demand for both houses and flats has been growing recently. This trend is one of the factors, which are able to influence the price of real estate. Our paper introduces determinants of housing price and their influence on actual real estate prices in the statutory city of Brno. The aim of this paper is to present key determinants of house price and find the hedonic price model, which describes, how determinants affect house price best. Realized prices were analyzed for housing units located in different districts of Brno. Key determinants in this research are a year of sale, an area of flat in square meters, number of rooms, location in districts of Brno, type of masonry and reconstruction. The dataset covers the time period between years 2012 and 2015. Hedonic price model is estimated by the method of ordinary least square. Besides main aim, four assumptions were verified, which should determine the influence on the price of individual determinants in the statutory city of Brno.789===== PAGE 1 (score 10, numeric-paren 0, table-words 0, var-words 10) =====101199112ACTA UNIVERSITATIS AGRICULTURAE ET SILVICULTURAE MENDELIANAE BRUNENSIS13Volume 66 149915Number 4, 201816https://doi.org/10.11118/actaun20186604099117DETERMINANTS OF REAL ESTATE PRICES 18IN THE STATUTORY CITY OF BRNO19Vlastimil Reichel1, Petr Zimčík1201Masaryk University – Department of Economics, Lipová 41a, Brno, Czech Republic21Abstract22REICHEL VLASTIMIL, ZIMČÍK PETR. 2018. Determinants of Real Estate Prices in the Statutory of 23Brno. Acta Universitatis Agriculturae et Silviculturae Mendelianae Brunensis, 66(4): 991 – 999.24The real estate market demand for both‑houses and flats has been growing recently. This trend is one 25of the factors, which are able to influence the price of real estate. Our paper introduces determinants 26of housing price and their influence on actual real estate prices in the statutory city of Brno. The aim 27of this paper is to present key determinants of house price and find the hedonic price model, which 28describes, how determinants affect house price best. Realized prices were analyzed for housing units 29located in different districts of Brno. Key determinants in this research are a year of sale, an area of flat 30in square meters, number of rooms, location in districts of Brno, type of masonry and reconstruction. 31The dataset covers the time period between years 2012 and 2015. Hedonic price model is estimated by 32the method of ordinary least square. Besides main aim, four assumptions were verified, which should 33determine the influence on the price of individual determinants in the statutory city of Brno. 34Keywords: hedonic price model, price determinants, real estate market35INTRODUCTION36Real estates are goods with a different structure. 37Property distinguishes from each other by their 38respective space allocation, orientation, building 39materials, number of rooms and their disposition, 40and other elements such as inner equipment. 41The individual character of real estate results 42from the demand of economic agents. The aim 43of this research is to identify and analyze main 44determinants of house price in the statutory city 45of Brno, and subsequently, find a suitable model 46specification to correctly predict prices of real 47estates based on selected determinants.48House price is an outcome of the intersection 49of a real estate market ’s supply and demand. Císař 50(1996) defines real estate market as a component 51of the general market system, which is subject 52to the standard market regularity with possible 53deviations. It is determined primarily by nature of 54traded estate (non‑transferability, service‑life, etc.). 55In other words, the price of the estate is determined 56by consumer’s decision. They compare gains 57obtained from house purchase with inevitable 58costs. According to Sirmans et al. (2003), the theory 59of hedonic prices is one of the theories, which 60deal with a problem of supply price‑setting on real 61estate market. The theory of hedonic price model 62was developed to work with a property, which 63has distinct characteristics but still are part of 64the same group of objects (in our case real estate). 65These products are generally called differentiated 66goods. The hedonic price model tries to identify 67price determinants depending on its quantitative 68and qualitative characteristics (due to the type of 69analyzed product). It also assumes that finding of 70key determinants enables us to calculate sign and 71size of each determinant on final price separately.72Court (1939), Haase (1992) or Wallace (1926) 73are often considered as founders of the hedonic 74price model concept. Their work, however, 75was not primarily focused on real estate price 76determinants. 77Authors, 78who 79as 80first 81used 82the concept of the hedonic price model to evaluate 83real estate, were Lancaster (1966) and then later 84Rosen (1974), Jud, Seaks and Winkler (1996) and 85also Helbich, Brunauer, Vaz, and Nijkamp (2014). 86These authors pointed to relevant real estate price 87