Prediction of House Price, Bank Campaigning Status and Bank Loan Status using

Machine Learning Algorithms.

Vinayak Vishnu Kolekar

x18185797
School of Computing
National College of Ireland
Dublin, Ireland
x18185797@student.ncirl.ie

Abstract—The residential property becomes an extremely
competitive field with the availability of an immense
amount of data and assets. People need more accurate
information to avoid fraud and wanted to be satisfied
after paying a huge amount. This paper consists of a
multiple linear regression model and its evaluation for
prediction of housing price with the help of features
related to real estate.
Many people take a loan from the bank for buying
property, enhancing business or any personal reason. As
the customer is concerned about their profit, Same way
banks also need to be careful about repayment of the loan.
In this study, I have applied logistics regression and
support vector machine learning algorithm to analyze
and predict the loan status of customer by considering the
transactional behaviour of the customer.
Telemarketing is one of the strategies to enhance
business, it allows bankers to reach directly to the person
and sell schemes where customers need to pay a security
deposit. This paper involves data mining and machine
learning approach to make a prediction on a successful
telemarketing call where a customer agrees to pay a
security deposit or not by applying a decision tree and K
Nearest Neighbor. In this paper, Multiple machine
learning techniques are applied, evaluated and compared
on financial and real estate data mentioned above.
Keywords—SVM,KNN,KDD,Housing,Telemarketing
I. INTRODUCTION
Organizations use digital marketing to reach consumer
audiences by calling them for a reason. Centralization of
public interaction in one place makes the task easy for
organizational product marketing. such places communicate
with customers through various modes such as telephone,
radio, newspaper, social media and other ways. One of the
easiest and widely used mode is a telephone. Banker uses this
strategy to reach out to customers by calling them on the
telephone. The given data set is the phone call-based
campaign of the Portuguese banking institute. It is a hectic
task to select the bunch of customers that will agree pay the
deposit. Nowadays the importance of this process has been
increased as this way business can directly and easily reach
out to the customers. Business people can understand
customers need and maintain relationships with them.
Another side due to the large population it is very difficult to
contact the customer via telephone. This study is to reduce
the stressed task of selection of the correct customer who
likely to purchase with classifying them based on given
attributes in data set such as duration of the call, income
range, credit score, job experience etc. This study involves
classification such as decision tree and K-Nearest Neighbor
for identification of desired customers of bank telemarketing
will pay the deposit or refuse. [1]
Different types of loan can be taken from the bank with very
less guarantee of return. Simultaneously the number of
transactions is expanding, and the amount of information is
massively increasing. This represents the customer financial
condition as well as risk around the loan is increasing. The
secured loans rely on assets those kept as security, but
unsecured loans depend on credit score and income. There
are various risk factors present in bank loans such as credit
risk, liquidity risk and low-interest risk. In this paper Data
mining and machine learning used to analyses this
transactional data and classify the outcome of the loan status.
Logistic regression and Support vector machine can identify
the difference between who return the loan in time and who
will be in defaulter. whether provided loan to a customer will
result in “Charged off” status or “Fully paid” can be classified
by logistic regression and support vector machine. [2]
The price of residential houses usually depends on the area of
interest, available services and current market situation.
There are many players included in the selling and buying
property processes such as brokers, land agents. The cost
which seller get, or the cost customer pays may differ from
the actual cost of the property. Also, the property price may
change under different situations in the market and the
common person is unaware of ongoing real estate situation
and its equivalent price, result in they lose their money. Thus,
the effective house price for consumers must be estimated as
per their requirement and financial plan. This estimation can
be achieved with the help of data mining and machine
learning algorithms, by considering various features of real
estate facilities available along with existing prices. This
paper consists of multiple linear regression to estimate the
Melbourne price of the house by analyzing existing prices,
location, number of rooms, car parking available, type of
house and year built. [3]
II. RELATED WORK
[“Aswin Ravikumar”] Stated that Several algorithms are used
to increase the accuracy and performance of prediction. By
considering researchers applied algorithms like “hedonic
regression”, “artificial neural network”, “AdaBoost”, “J48
tree” [“Aswin Ravikumar”] implemented more advanced
algorithms for price prediction like “Random forest”,
“Multiple linear regression”, “support vector machine”,
“gradient boosted tree”, “neural network” and “bagging”.
Among which random forest is more accurate compared to
others. [3]
[“Nihar Bhagets”] Journal is intended to forecast successful
home prices in respect of plans and preferences of real estate

XXX-X-XXXX-XXXX-X/XX/$XX.00 ©20XX IEEE

customer. The paper involves the operation of the webpage
which combines multiple linear regression model with the
help of data inserted by the customer. This application will be
helpful for customers who would like to invest in property
without taking the assistance of the agent. [4]
[“Danh Phan”] House price prediction is done with the help
of combine implementation of multiple machine learning
algorithms and evaluation. The evaluation gives result as
Step-wise and SVM is a competitive approach among all
other combinations with train MSE of 0.0558. [5]
[“Sumit Chopra”] Implemented a new approach to
“Regression” in which consists of the dependent variable and
features included for prediction also this approach depends
on the hidden parameters such as desirability which cannot
be measurable. This approach called as LME which is a
combination of trainable parametric model and non-
parametric manifold model to predict the dependent variable.
[“Sumit Chopra”] states that this model gives good
predictions than individual parametric and non-parametric
models. [6]
[“Vasilios Plakandaras”] Propose novel on hybrid prediction
methodology which is a combination of Ensemble Empirical
Mode Decomposition [EEMD] with Support vector
regression from machine learning. Researcher Examine
eleven dependent variables for US house price forecasting
with the help of econometric BAR and BVAR techniques and
novel EEMD-AR-SVR model. The research detected
accurate downturn from 2006-2009. According to [“Vasilios
Plakandaras”]at this system is best for early warning for the
upcoming sudden change in price. [7]
According to [Vishal Venkat Raman], With a tremendous
amount of informal data and assets, the housing sector
becomes an intensely competitive field. By processing these
data developers can provide an advantage to the real estate
industry in the form of future trend prediction and help them
to take a favourable decision. [Vishal Venkat Raman] at. El.
Applied linear regression for identifying a suitable area for
the customer in Delhi. [8]
[“Hujia Yu”] Performed real estate price prediction with
regression like “lasso”, “SVM regression”, “Ridge”,
“Random forest” and classification models such as “Naïve
based”,” logistic regression” and “SVM classification”.
Further applied PCA successfully to improve the prediction
accuracy of the model. [“Hujia Yu”] concluded that
Classification performs better than regression. [9]
[David Murphy] Implemented prediction model of loan
defaulters using social media data such as mobile calls, SMS
logs etc. [David Murphy] Concluded that the single random
forest provides the best AUC and profit than other
combination of a model trained (7% increase in overall
performance). [10]
[“Xin Li”] States that accuracy for risk prediction algorithms
like KNN, Bayesian, DNN is not much accurate from the data
expansion. Autor applied LSTM-SVM algorithm to improve
the accuracy of prediction compared to single risk prediction
algorithm. He concludes that there are still some limitations
are present due to the lack of most primitive data and needs
to be improved. [11]
[“G. Arutjothi”] Proposed and machine learning model which
predicts the loan status of the customer whether he or she is
valid or default customer with an accuracy of 75.08% with
KNN. The further author performed iteration on K values of
the KNN algorithm and concluded that at 30th level model is
giving significant accuracy to avoid loss in the banking
sector. [12]
In this study [“Başak Gültekin”] machine learning techniques
applied to predict “good credit” or “bad credit”. Whereas
researcher concluded that for classification Neural network
performance was accurate than other models with low
average square error and Random forest (84 % Accurate)
gave better result than logistic regression (81 % Accurate ).
[13]
[“Aboobyda Jafar Hamid1”] Implemented model based on
banking data to predict loan defaulter status whereas another
applied three algorithms J48, BayesNet and NaiveBayes by
using WEKA application. J48 algorithm is performing well
for classification data with high accuracy and low mean
square error. [2]
[“Sérgio Moro”] Proposed and machine learning approach to
predict successful telemarketing calls for selling deposit.
The author compared four algorithms including decision tree,
neural network, logistic regression and neural network.
He concluded that the neural network gives results where
AUC = 0.8 and ALIFT=0.7 and it gives 79% successful result
of customers who subscribe to the deposit by selecting 50 %,
positive classified clients. [14]
[“Elzhan”] researchers performed various classification
model for prediction of bank telemarketing campaign result.
The evaluation of algorithms has been done by “Receiving
operator characteristics “ROC and “cumulative accuracy
profile “CAP curve. According to [“Elzhan”] the best
classification models are random forest and deep artificial
intelligence. [1]
III. METHODOLOGY
A. KDD
There is a necessity of modern data computational theory and
tools for today's generation to extract data from the
tremendously growing digital data. These modern
computation theory and tools are part of Knowledge
Discovery in Databases (KDD). Why do we need KDD? The
usual method of converting data into knowledge is based on
manual observations and understanding of any system. For
example, any fashion trend is defined on data collected from
stores then this data is collected at some analysis team where
they check which type of cloths are sold in which month and
give their observations. In today's generation, there is a
massive amount of data is generating day by day and human
needs its knowledge in less time. To avoid the wastage of
time and money we need KDD theory and tools which gives
best results in very less time. [15]
KDD is nothing but the extraction of hidden designs from
massive unstructured observations or data of any system.
which helps to determine useful knowledge from collected
unstructured data. This is a frequently used data mining
process which includes data selection, data cleansing and
processing, Data analysis, Data mining, Interpretation.
Considering the facts mentioned above KDD is used to
analyze the data sets from raw data sets. [16]
Stages of KDD
Data Selection: - Data for Telemarketing is collected from the
1. Understanding: -This is the first step of KDD where UCI library. The original data set has 41,188 rows and 21
the aim of the process is defined by the in-charge of identical columns. The data set consist of groups of attributes
the KDD process and it might be revised while such as “Bank client data”, “Data related to the last contact”,
going through the process. The further process “Social and economic attributes”, “other variables” and the
proceeds by keeping this goal in mind. “Desired target variable”.
2. Data Selection: -In this stage, the data is analyzed
deeply to get the samples for training, testing and Data cleaning and preprocessing: - The data need cleaning
before applying any model on it. The identification of missing
validation. The well managed and designed
data is checked with the help of “is.an” function as shown
sampling process differentiate the structured
below. There are no missing values present in the data set.
meaningful data and unstructured raw data.
3. Data cleaning and preprocessing: -This stage
consists of preprocessing. There are multiple
outliers, missing values, unexpected characters may
present in data set so we need preprocessing to clean
data and make ready meaningful cleaned data to the
model. Figure 1
4. Data reduction and transformation: - In this stage,
there are multiple data reduction and transformation Further, the outliers are detected and removed from the data
techniques are considered. This helps to process data set. Outliers are considered as values that conflicting with the
more accurately and precisely. As we will be dealing remaining values of the data set. Below diagrams are the
histogram and boxplot of age where we can conclude that age
with many unwanted data features which are not
has outliers.
making an impact on output, this stage removes
unwanted variables and transform it into a subset of
the main data set.
5. Exploratory analysis and Model selection: - The
exploratory analysis aims to gain more insights into
the problem statement. In this stage, one or more
models which can provide valuable insights should
be selected. You may select multiple models which
may be useful and perform exploratory analysis.
6. Data Mining-In this stage as best as model-fitting
has been done and make things extensible. Plotting Figure 2
of different patterns has been done and get checked
whether they are correct or not. The data mining
algorithm applied and verified repeatedly to reach
its performance up to the mark. For example, In
KNN the value of K will decide the percentage of
error and accuracy.
7. Interpretation, evaluation and delivery: - This step
does output parameter check, observation of data
mining patterns and verification of the accuracy
defined in the first step. Here preprocessing steps
can be done to check and improve the effect by Figure 3
adding an additional feature to the algorithm. From
this step, the obtained knowledge can be exported I have removed outliers by considering Interquartile range
and removed values present above 3rd quartile. I found that
and stored as a document. [16]
there are 469 outliers were present in the data set. In the same
B. In this study, the data has been collected from the way, the outliers from other variables are also removed. For
domain of “Real estate”, “Telemarketing” and “Loan example, the duration column has some 0 values. which lies
defaulter” and nurtured with the help of the KDD below 1st quartile and with common sense, we can guess that
process as mentioned above. is call duration is equal to 0 then definitely that person didn’t
subscribe. We have removed such instances present in the
1. Telemarketing data set.
Understanding: - The data for telemarketing has been
collected by considering the aim as, “Can we reduce the Data reduction and transformation: -In this step, the creation
stressful task of selecting the right clients in the process of of adequate data being prepared and developed for
Telemarketing with the use of machine learning?” requirements of data mining algorithms.
Reduction: -The data reduction techniques have applied to
remove the unexpected columns in the data set. This helps to
process data more accurately and quickly. As we will be
dealing with many unwanted data features which are not
making an impact on output, this stage removes unwanted Figure 5
variables and transform it into a subset of the main data set.
The remaining subset contains features such as “age”, “job”,
“marital”, “education”, “default”, “housing”, “loan”,”
duration”, “y”.
Figure 6
Transformation: -Remaining data after feature reduction
undergoes through transformation techniques which required
for data mining algorithms. Data types of features, the scale 2. Loan Defaulter
of feature, conversion of a continuous variable into categories
Understanding: - The loan status data set is collected by
has been done. For example, to perform a Decision tree we
considering the goal as, “How can we predict customer loan
need categories where at each root decision will be taken on
status using machine learning, taking into account customer’s
some condition. For this transformation features like “age”,
transaction behaviour?”
“job”, “marital”, “education”, “default”, “housing”, “loan”,”
duration”, converted into categories. The age column
Data Selection: - Data for loan status prediction is collected
categories into 4 categories like, “less than 32”,”32 to 47”,”47
from the Kaggle library. The original data set has 1,00,000
to 70”,” greater than 70”. This way all ages are now replaced
rows and 19 identical columns. The data set consist of
with categories like “1”,”2”,”3” and ”4”. The further data
attributes related to “Bank customer data”.
type of these categories needs to be changed from factor to
numeric. Similarly, the transformation has been done for
Data cleaning and preprocessing: - Before applying model
other mentioned columns as well. Below Fig. shows the
the data cleaned with the help of “is.na” function. There were
structure of the final data set after Reduction and
many NA values present in the data set as shown in the figure.
transformation.
There is a presence of outliers such as Credit score, higher
than 800 which is not acceptable by common sense. These
values are removed and replaced with a mean credit score by
a calculating mean of credit score. Same way in “Current
Loan Amount” there is a large value present “99999999” and
removed by outlier reduction technique.

Figure 4

Model selection: -In this stage different types of classification

models applied on data set. Before that, the data received
from Data Reduction and Transformation is divide into 80:20
ratio for training and testing. The preparation of the train and
test data set has performed to train Model and after that test
Figure 7
with the remaining 30% data. Later testing data output and
predicted data output compared for interpretation of Model. The output variable Loan status is in the form of character
On this data set, the “Decision tree” and “K -Nearest like “Fully paid” and “Charged Off”, needs conversion into 0
Neighbor” has been applied and evaluated. and 1 as in dichotomous form. From the below plot we can
see there are more “Fully paid” categories present than
Evaluation and Interpretation: - After applying Model on “Charged off”.
data set, the evaluation of each model has been done with the
help of the confusion matrix, Model summary and different
patterns received from a prediction on test data set. Whereas
the performance of Model has been checked by parameters
like Accuracy, Sensitivity, Specificity and Kappa value. For
KNN the Model evaluation is based on Error rate after
applying different K values to the model. For given K value
we will get different error rate and its respective accuracy.
Below are the Figures of confusion matrix obtained from
Decision tree and KNN.

Figure 8
Data reduction and transformation: -In this step, the creation Data cleaning and preprocessing: - The data need cleaning
of adequate data being prepared and developed for before applying any model on it. The identification of missing
requirements of data mining algorithms. The reduction is data is checked with the help of “is.an” function and removed.
achieved by removing unrelated columns, which are not Below plot shows the missing values present in the data set.
having much impact on the output variable. As previously
done in Telemarketing data set in this data set also the data
transformation is performed by categorizing continuous
variables such as, “Credit Score”, “Years in the current job”,
“Bankruptcies”, “Annual income”, “Current Loan
Amount”,” Number of credit problem” and” Years of Credit
History”.

Model selection: - This stage is the selection of an appropriate

model which will be applying on data set. Before applying
the data model, we have a split the data into 80:20 ratio. The
preparation of train and test data set performed to train the
model and remaining data is applied for prediction. Further
performance verification has been done by comparing with
predicted data. On this data set Logistic regression and
Support vector machine has been applied and evaluated.
Figure 11
Histogram of the price which is predicting variable is plotted
and the result is skewed. Therefore I have applied Log on the
price to make the price equally distributed. Below are the plots
before and after scaling.

Figure 9

Figure 12

Figure 10

Evaluation and Interpretation: - After applying Model on

data set, the evaluation of each model has been done with the
help of the confusion matrix, Model summary and different
patterns received from a prediction on test data set. Whereas
the performance of Model has been checked by parameters
like Accuracy, Sensitivity, Specificity, ROC curve and AUC.
Below are the confusion matrixes for Logistic regression and
Support vector machine.
3. Real Estate
Understanding: - The data for Melbourne house price has
been collected by considering the aim as, “How can we
forecast house prices using multiple linear regression taking
into account house characteristics?”
Figure 13
There are some #N/A were present in dataset those were
removed by first replacing with NA and then preprocessing
has been applied.
Data reduction and transformation:- The data reduction has
been done on the basis of correlation, as below we can see the
correlation graph of the dependent variable and independent
variable. Whereas there are many less correlated variables
present. So we have to reduce these columns from dataset.

Data Selection: - Data for Melbourne house price is collected

from the Kaggle dataset library. The original data set has
34,857 rows and 21 identical columns. The data set consist of
attributes as features of the house like Suburb, Address,
Rooms, Type, Price, Method etc.

Figure 14
Updated correlation after reduction of features from data set is
as given below. Whereas there is more correlation between the
dependent variable and independent variable.
Figure 15
will not paying can be correctly predicted by 92%.whereas
Sensitivity and specificity are 0.99 and 0.02. The sensitivity
of the model is the true positive rate of the model which is
correct positive cases identified by the classifier, in this case,
the positive class is “NO”. There are 6942 cases are true and
Model predicted also true, but 31 cases were actually positive
but Model predicted negative. Whereas there are 571 cases are
negative and model predicted positive and 12 cases are
negative and model predicted negative. The specificity of the
model is given by total negative predictions divided by a total
number of negative cases which is very less 0.02. From the
above evaluation, we can conclude that this model predicts
positive cases better than negative cases. also, the Kappa
value given by the model is 0.028.

Model selection:- This stage is the selection of an appropriate

model which will be applying on data set. Before applying the
data model we have a split the data into 70:30 ratio. The
preparation of train and test data set performed to train the
model and remaining data is applied for prediction. Further
performance verification has been done by comparing with
predicted data. On this data set, multiple linear regression has
been applied and evaluated. Before model execution, I have
done scaling to make all features lies on the same scale.
Evaluation and Interpretation- After applying Model on data Figure 17
set, the evaluation of model has been done with the help of the
Model summary, different patterns received from a prediction Summary:-After performing model on train data set we can
on the test data set and parameters like “RMSE”,” MAE”,” check a summary of the model. Where we can see the primary
MSE” and “R2”. Below is the summary obtained from the splits available at every node. The summary for each node is
model. explained by model summary as shown below.

Figure 18

Model tree:- The model tree diagram of Decisions as shown

below, where we can check the condition on each leaf. For
example, if Duration < 2.5, a model predicting particular
Figure 16 instance as “NO”, furthermore decisions takes place to predict
test data instances.
IV. EVALUATION OF MODELS
1. CAN WE REDUCE THE STRESSFUL TASK OF SELECTING
THE RIGHT CLIENTS IN THE PROCESS OF TELEMARKETING
WITH THE USE OF MACHINE LEARNING?
Decision Tree:- Decision tree enumerate the characteristics of
the data set such as “age”, “job”, “marital”, “education”,
“default”, “housing”, “loan” and ” duration”. The model
represents these features as a form of the tree where are each
node in the tree is decision towards prediction. Evaluation of
Decision tree has been done with the help of parameters such
as confusion matrix, a summary of the model and Model tree
diagram. Figure 19
Confusion Matrix:-Confusion matrix with the help of the
“caret” library shows the predicational accuracy of the model, K Nearest Neighbor:-KNN is a suitable model for
In this study decision tree accuracy, is 92.03%. which shows classification which belong to the family of supervised
that the model predicts customers who will be paying and who learning. In knn, the output variable plotted on the
multidimensional plane, whereas planes are a number of
features present in the model. After that when we predict test
data with the help of model Euclidian distance is calculated to
find neighborhood instances. Depending on the values of K
the model gives prediction whether the customer will
subscribe or not.
Confusion Matrix: - Confusion matrix for the KNN algorithm
is as shown below in which True positive cases predicted are
7286 whereas false-negative predict cases are 4. There are 53
negative cases which predicted positively by model and 213
positive cases which predicted negatively by model.
Sensitivity and specificity of KNN are 0.9716 and 0.07.

Figure 22

Confusion Matrix:- As the data set is less balanced, more a

number of 1s present in data set and model less trained for
another category, due to which we received a lower False-
negative rate. Confusion matrix for This study has values
False-negative =2, True positive =12701, False positive = 1
and True Negative =2524. By considering this the accuracy of
Logistic regression is calculated as (TP+FN)/N=0.8341 ~
83.41 %. Logistic regression for loan status has 0.99
sensitivity and 0.007 specificity.
Figure 20

In this case, the accuracy is much better than the Decision tree
96.48%. The accuracy of KNN increases exponentially as the
value of K increases. Along with error rate decreases as the K Figure 23
value increases.
ROC:-Below curve shows the Receiver operating
characteristic curve for the logistic regression curve plotted
with the help of Sensitivity and Specificity. This shows the
area under the curve which defines predicting a range of the
model

Figure 21

2. HOW CAN WE PREDICT CUSTOMER LOAN STATUS USING

MACHINE LEARNING, TAKING INTO ACCOUNT CUSTOMER’S
TRANSACTION BEHAVIOUR ?
Logistic Regression:- Linear regression is applied in this study
to predict the output of whether Customer loan status “Fully
Pay ”Or “Charged OFF”. The features are included in the
model such as “Current Loan amount ”,” Term”,” Credit score
”,” Annual income ”,” Homeownership ”, ”Number of
credit”,” Problems bankruptcies” and “Current job year”. The
Evaluation of logistic regression has been done with the help
of Summary of Model, Confusion matrix and ROC curve.
Summary:- The summary received from the logistic
regression model is as shown below, where we will get the
significant features of the model. Variables having 0 value are
more significant whereas the p values near to 1 are less
significant. We can remove less significant values and run the
model again for best results.
Figure 24
AUC:- Area under the curve for this model is 60.23%.This
show capability of model classification. Higher the value
higher percentage of prediction power of 0 as 0 and 1 as 1.
Figure 25
Support Vector machine: - SVM is one of the supervised
machine learning algorithm, commonly used for classification
as well as regression. In this model, the classification of the
dependent variable is achieved by plotting hyper plan. In this
paper for support vector machine, we have dependent
variables such as “Current Loan amount ”,” Term”,” Credit
score ”,” Annual income ”,” Homeownership ”, ”Number of
credit”,” Problems bankruptcies” and “Current job year”. The
performance of SVM is measured by Confusion matrix, ROC i.e. Price. In this case, we can see there are almost all features
and AUC pass the significant level, a p-value less than 0
Confusion matrix:-Confusion matrix for SVM is as shown in
below where we can find the accuracy is the same as logistic
regression, which is 83.42%.In this case, the positive class is
0 which is “Charged off ”.The specificity of Support vector
machine is equal to 1 which means that SVM can predict
negative cases,” Fully paid ” predict more correctly than
“Charged OFF”. There is a very low value for sensitivity.

Figure 29

R-Square of Multiple linear regression is 0.61 which also

tell us the accuracy of the model. Mean absolute error is 0.49
and the Mean square error is 0.41. Which means that the final
predicted value is +-0.49(MAE) away from an actual value.
So we can conclude that Multiple linear regression gives 60 %
of accuracy on this data set.
Figure 26

ROC:- Roc curve for support vector machine is shown below,

where we cannot found curve means the power of prediction
is straight forward 50%.

Figure 30

There are some patterns drawn from the model as follows.

Residual Vs Fitted:- This plot shows residual values against
the fitted values of the model. This graph represents the
residual trend in model, Outliers and shows
heteroskedasticity. From this graph we can conclude that
model predicting correctly at lower values but overprediction
present at a higher level of values.
Figure 27

AUC:- Area under the curve for SVM is 50%From this we can
conclude that the Logistic regression has more AUC than
SVM.

Figure 28 Figure 31
Q-Q plot:-This shows the Normal distribution of residuals, as
3. HOW CAN WE FORECAST HOUSE PRICES USING all residuals are following the line on the graph which shows
MULTIPLE LINEAR REGRESSION TAKING INTO ACCOUNT HOUSE the residuals are from a normal distribution. Some of them at
CHARACTERISTICS? the lower side, are away from the standard line are not from
Multiple Linear Regression:-Multiple linear regression tries to distribution.
form a relationship between one or more informative variable
and dependent variable by applying the linear equation to
observed data. In this study, there are multiple features are
available for prediction of house price such as “Room”,”
Bathroom”,” Car parking”,” Type”, “Distance”, “year built”,
“building area”, “Latitude” and “Longitude”. These all
variables are more correlated to Price. The evaluation of
Multiple linear regression was done by “Root Mean Square
Error”,” Mean Square Error” and “R2”.
Summary:- The summary of Multiple Linear regression shows
the significance of features available with dependent variable Figure 32
Scale-location plot:- This plot is same as residual plot whereas
the values are the square root of standardized residuals. From
this plot, we can find a residual trend.
[1]
[2]
[3]
[4]
Figure 33
[5]
Residual vs Leverage plot:-This plot is standardized residual
versus its leverage, this plot also consists of cooks distance [6]
limit. Any value present outside of this limit is an outlier as
we can observe there is one outlier. But there will not be much
effect on model prediction. If there are more outliers then we
[7]
have to apply suitable outlier reduction technique.
[8]
[9]
[10]
[11]
[12]
Figure 34
V.CONCLUSION AND FUTURE WORK [13]
In summary, in this paper different Machine learning
models have been applied in different sector like [14]
“Telemarketing”, “Housing” and “Loan defaulters”. The
original data sets collected, preprocessed and transformed into [15]
clean datasets. On cleaned data, different models are then
applied, analyzed and evaluated to achieve the aim of the
research. [16]
Evaluation of Models implies Multiple linear regression is [17]
predicting house prices with moderate accuracy of 60%. In
future, another regression model can be applied to increase
accuracy such as XGboost. The KNN is better in selecting
favorable customers who will subscribe and pay security [18]
deposit than a Decision tree. The KNN has an accuracy of
96% whereas the decision tree has an accuracy of 92%. But
the rate of specificity is less which can be increased in future. [19]
In future, the accuracy of the decision tree classifier model can
be improved with pruning. The loan status of the customer is
predicted by Logistic regression and SVM equally at [20]
83.41%.but the AUC for logistic regression is 10%better than
SVM. By changing, kernel type of SVM accuracy can be
increased and achieve better AUC.
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