Impact of External Characteristics on Housing Rental Prices in the City of Valencia

Abstract

[EN] The aim of the paper is to analyze the impact of external or locational characteristics on the housing rental price. We try to determine factors that are most important for the housing rental prices by using the multiple linear regression. We have used a sample of 2,678 rental properties and start with 18 neighbourhood variables relating to the socio-economic level of the population, facilities, environmental surroundings and accessibility. In order to reduce the number of explanatory variables and avoid multicollinearity problems, we carry out a factor analysis which leads us to select seven variables for future introduction into a housing price model. The analysis points out that socio-economic variables of the neighbourhood are the relevant and explanatory elements of the rental price. We also appreciate that centrality analysed from the distance to the CBD has not relevance. The results are of interest to the housing rental market, both for investor¿s decision-making and for the design of marketing and communication strategies. Also, the results are useful to the design of urban policies relating to public housing for rent. The housing area has a very important weight in the model; if we limit it in the selected sample, we think that we will be able to measure to a greater extent the impact of external variables.