Hedonic Regressions and the Decomposition of a House Price index into Land and Structure Components

The paper uses hedonic regression techniques in order to decompose the price of a house into land and structure components using readily available real estate sales data for a Dutch city. In order to get sensible results, it was useful to use a nonlinear regression model using data that covered multiple time periods. It also proved to be necessary to impose some restrictions on the price of structures. The resulting builder’s hedonic regression model was compared with the results for traditional logarithmic hedonic regression models.House price indexes, land and structure components, time dummy hedonic regressions, Fisher ideal indexes.