Alleviating surveyor bias in real estate: An application to vacancy and property prices

Abstract

Although vacancies in the real estate market have always been of key interest to both private and public stakeholders, measuring the impact of vacancy rates on property prices is challenging. This study attempts to quantify the extent of the influence of vacancy rates on the price decline of commercial properties. The dataset used in this study was collected and collated by valuation experts. We attempt to alleviate the bias inherent in the price estimates provided by the surveyors. A Bayesian multilevel estimation model was employed, and the results revealed that while some experts do not show deviations from the standard tendency of a peer group, others do diverge from this norm. Based on these findings, a bias-controlling price decline rate was derived. As many real estate statistics are produced based on survey data compiled by experts, the approach adopted in this study is expected to be applied to various real estate practices to mitigate the inherent and inevitable surveyor bias.

Keywords

• surveyor bias
• vacancy
• property price
• Bayesian estimation
• multilevel model