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Refining the Effects of Location in Computer-Assisted Rating Valuation

Author/s: Yu Shi Ming, Kevin Siu

Date Published: 1/01/2003

Published in: Volume 9 - 2003 Issue 3 (pages 224 - 247)

Abstract

In Hong Kong, the rating and valuation authority uses computer-assisted mass appraisal (CAMA) in the yearly reassessment of each property’s annual rental value. In particular, the multiple regression analysis (MRA) technique has been applied to the valuation of domestic, office, industrial and some commercial properties. Tax appraisers adopt the traditional method of geographical stratification to examine the effect of location on property values in the MRA models and encounter problems such as value inconsistency at neighbourhood boundaries. This paper introduces Location Value Response Surface (LVRS) modelling, which has been used to appraise single-family houses in the United States and Britain. The paper further develops a constant quality approach, based on the standardisation method, to derive the location factor and illustrates in a case study, how this technique can be used to value high-rise office units for rating purposes in Hong Kong. As a result, the prediction of property values is improved using the model.

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Keywords

Location - Location Value Response Surface Modeling - Mass Appraisal - Rating - Regression

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