Mass Valuation:Processes & Decisions

Gerhard.Muggenhuber@bev.gv.at

BEV - www.bev.gv.at - Federal Office of Metrology and Surveying Dept. International Relations, State Borders

A-1020 Vienna, Schiffamtsgasse 1-3

PhD-student at TU-Vienna

C+LR KEN Cadastre + Land Registry Knowledge Exchange Network

Land Administration ProcessesData – Processes – Resources

Land Administration Processes

Price - Value

Levels of value

Perspectives

on value

Source: den Ouden, E. (2012): Innovation Design: Creating Value for People, Organisations and Society. Dordrecht: Springer.

Theory of price:benefit gained from those who

demand the entity meets the

seller's marginal costs

Theory of value:Present worth of future benefit

Classical economic:

• Labor theory of value

• Exchange value

Price - Value

Levels of value

Perspectives

on value

Source: den Ouden, E. (2012): Innovation Design: Creating Value for People, Organisations and Society. Dordrecht: Springer.

Nutzen – Wert – Preis

Levels of value

Perspectives

on value

Source: den Ouden, E. (2012): Innovation Design: Creating Value for People, Organisations and Society. Dordrecht: Springer.

Theory of price:benefit gained from those who

demand the entity meets the

seller's marginal costs

Theory of value:Present worth of future benefit

Classical economic:

• Labor theory of value

• Exchange value

Model Valuation cycle

adapted from {Espinosa #3270}.

CRISP-DM Data Mining Process Model

Data categoriesselect / cooperate to ensure access

OBJEKT

VALUE§legalRestrictions

Rights

FinancialCosts / Risks

Benefits

OBJEKT

SiteImprovement

Land

LocationInfrastructureDis-/Amenities

VALUEi = f (Si, Li, Fi, §i) + f (x,y,t)

• How to gather / store / share data ?

• Are our processes at C&LR fit for purpose ?

– PPP: D: Sales price collection / USA: MLS / SLO: sales-price-db

– A: Transfer-prices Housing Register

• How to contribute to a dynamic system ?

Real Estate Market a dynamic system

flats – new/old houses

VALUEi = f (Si, Li, Fi, §i) + f (x,y,t)

Real Estate Market observations

Life Cycle

SUPPLY TRANSFER DEMAND

Statistic Austria

(GWR)

Regions

Cadastre Asking Price Land Tenure

Public Reg.

C& LR

Statistic

Austria

Offer

Price

Use Regulation

Constructing

Investors

Subdivisions

Buildings

TO

SELL

TO

RE

NT

TO

SELL

TO

RENT

Owners

Users

Land -

Building land

Potential land use

Land& Building / / -

Improved building

land

- -

Under construction ∑Building permits

∑Construction

costs

- - -

New construction ∑ Building

completed

- -

Old construction - -

Energy efficiency - -

Lester, B., Visschers, L. & Wolthoff, R. (2013): Competing with Asking Prices. IZA Discussion Paper, No. 7163, http://ftp.iza.org/dp7163.pdf .

McCord, J. (2014): Northern Ireland Asking Price Index, http://www.nihe.gov.uk/northern_ireland_asking_price_index.pdf

Real estate transfer market

to sell

to rent

Tosell

Torent

Flat

Flat+

House

Land

Spatio-temporal variation of characteristics & pricealternating granularity / missing characteristics

Real Estate: Assets & Space Marketsrenting / buying / constructing / space

DiPasquale, D. & Wheaton, W.C. (1992): The Markets for Real Estate Assets and Space: A Conceptual Framework.

Journal of the American Real Estate and Urban Economic Association V20, 1, 181–197.

Statistical Modelling of Value

info is in the residuals

analyzing variance-covariance matrix

Statistical Modelling Challenges & Approaches

Real Estate Market fundamentalsspatio-temporal variation of characteristics & price

Ball, Michael (2012): RICS European Housing Review 2012. RICS. London.

ask price – sale price

EUROSTAT (Hg.) (2012): Technical manual on OWNER-OCCUPIED HOUSING for Harmonized Index of Consumer

Prices (v.2.0).

Willingness

Infrastructure f. data / processes / servicesHow much cooperation does the market accept ?

Mass valuation to facilitate better decision making: Socio-economic / Spatial planning processes Property related taxation / subsidies Parameters to support, but NOT to challenge individual valuation

Market observations & Mass valuation• to reveal fundamental facts & market trends• for a functioning /bubble-free real estate market• for a transparent decision making within Gov. - Business - Citizens data on market fundamentals : NL, SWE, SLO, PL, CZ data on value-determining parameters FR, G: Land-value-maps data on public rights & restrictions CH: ÖREB

Polit

ics

Infr

a-st

rukt

ur

Willingness

Infrastructure f. data / processes / servicesDoes C+LR see the opportunity ???

C+LR: opportunityto contribute essential parameters & processes site characteristics of land & building Provide private & public property rights Ensure spatiotemporal labeling of data clearly specified metadata (level of completeness, granularity, ...) Value-determining parameters: efficient acquisition / multiple use

-Web- / Data-Mining / Cooperation (G-B-C)

Tech

nic

al

coo

p.