Valuation of housing attributes and the effect of tenant and landlord characteristics in the Norwegian rental market

Abstract

The present study uses a standard hedonic log–log framework to analyze rent variations in the Norwegian housing market. Using data from the national rental survey (Leiemarkedsundersøkelsen) as a basis, this study finds that geographical variables, hedonic qualities, and tenant–landlord characteristics explain 49 percent of total rent variations across regions. Unlike previous studies, we compose several interaction variables indicating, for example, the effect of the number of bedrooms for a given dwelling size and the effect of access to an elevator given various floor levels. We also use several dummy variables to study the effect of tenure length, which has not been adequately examined in other research. This study further acknowledges that tenants limit their choices of housing services by property type and location, thereby confining themselves to specific submarkets. This results in distinct price functions for each submarket. Our findings should be of importance to market makers such as appraisers, property managers, and real estate analysts.