Methodology

This research is based on secondary data. The secondary research was mostly used to provide a

background study on this industry and to develop an understanding of its present market status.

English household survey data is employed as a secondary source to test our study's goal. This

survey takes into account a wide range of household and societal parameters. First, we check the

relationship between or which factors influence the property's purchasing decision in this

analysis. For this, we first utilized a correlation analysis, which demonstrates if a factor has a

positive or negative impact on a consumer's decision to buy real estate. After that, we use

regression or hedonic regression to see how the factor affects the client's home buying decisions.

Selection of variables

In this study, the number of variables has an effect on the client's purchasing decision when it

comes to real estate. The most crucial variables are as follows: The fundamental premise is that

property size is correlated with school quality. To determine the size of the property, we used

square feet of living area. The client's education is also significant in determining whether or not

to make a decision. This model takes into account family income, family size, household age,

and other household variables.

The empirical hedonic specification

The hedonic regression approach is a regression methodology that divides a product into

constituent pieces or features in order to evaluate the value of a good, service, or asset. Through

regression analysis, the contribution value of each attribute is determined independently.

Hedonic methods are used to estimate the price of assets that are not available on the market at

specific times, but pricing information is critical for developing price relations. It's founded on
the idea that an asset's price is a function of its quantifiable qualities, which can be displayed in a

regression model to see how the price varies as each attribute changes. We're now going to build

the functional form of regression.

V i ,t =β 0 + β 1 depchild + β 2 sft + β 3 agecat + β 4 nssech+ β 5 empst + β 6 freelease+ β7 gincome+ β 8 nbedroom+ β 9 housety

+ε

V i ,t is the house hold price in in 2018. The number of dependent children in the house has an

impact on purchase decisions. Number of full time workers in the house has an impact on the

decision of purchaser to buy the house. The age categories of the persons who lives in the house

has a strong effect on the purchase decision of the house. Socio economic category of the house

also effect the decision of the price of the house if it’s in more social area it’s price would be

high. Employment status of the purchaser has a very strong effect on his decision to purchase a

house or not to purchase a house. Another variable effect the decision either it’s free or on

leasehold house. Type of house is also effect purchaser decision to buy the house. Total number

of bedrooms in the house also effect the price more bedrooms has more price of the house. The

residence of the house hold gross income also effect the decision of the house and its price. Other

criteria, such as the household's income, the number of children, overall region/location of the

house, and tenure of the purchaser with vacant, also influence real estate property purchase

decisions.

Regression Table:
. reg aagfh18 hhsizex ndepchild sft ager nssech9 empprt3x freeLeas hatentp3 nbedsx HYEARGRx tenure8x region3x

Source SS df MS Number of obs = 13,431

F(12, 13418) = 170.19
Model 2.2080e+09 12 184003618 Prob > F = 0.0000
Residual 1.4507e+10 13,418 1081193.56 R-squared = 0.1321
Adj R-squared = 0.1313
Total 1.6715e+10 13,430 1244638.76 Root MSE = 1039.8

aagfh18 Coef. Std. Err. t P>|t| [95% Conf. Interval]

hhsizex 44.72371 16.84291 2.66 0.008 11.70925 77.73818

ndepchild -116.8855 18.8695 -6.19 0.000 -153.8723 -79.89858
sft 79.68235 15.49188 5.14 0.000 49.31609 110.0486
ager -36.29523 8.684759 -4.18 0.000 -53.31857 -19.27188
nssech9 -10.2845 2.40037 -4.28 0.000 -14.98956 -5.579438
empprt3x -15.44214 2.203124 -7.01 0.000 -19.76058 -11.12371
freeLeas -30.31961 4.88275 -6.21 0.000 -39.89049 -20.74873
hatentp3 49.81037 5.503782 9.05 0.000 39.02219 60.59856
nbedsx 25.31008 11.60592 2.18 0.029 2.560845 48.05931
HYEARGRx .0019457 .0005398 3.60 0.000 .0008875 .0030039
tenure8x -537.0236 31.66352 -16.96 0.000 -599.0886 -474.9587
region3x 79.82299 10.64073 7.50 0.000 58.96566 100.6803
_cons 2733.055 99.41199 27.49 0.000 2538.193 2927.916

These results are showing that all the variables are highly significant in the model have a strong

impact on prices of house in 2018. House size, number of full time workers, type of house,

number of bedrooms, household gross income, and region of the house has positive impact on

price of house. However, number of child, employment status, age categories of the lived

persons, free or on lease house the house, tenure of the house will decrease the price of the

house.

VIF:
. vif

Variable VIF 1/VIF

tenure8x 15.65 0.063883

freeLeas 7.50 0.133323
hhsizex 6.22 0.160816
hatentp3 5.27 0.189595
ndepchild 4.26 0.234686
sft 2.36 0.423605
HYEARGRx 2.24 0.445442
empprt3x 1.78 0.560238
nbedsx 1.69 0.592222
ager 1.58 0.632695
nssech9 1.05 0.955881
region3x 1.01 0.991494

Mean VIF 4.22

This results are showing the model is free from multicollinearity as the vif value is less than 10.

So there is no issue of multicollinearity.

Hedonic Regression:

7
pi=α + ∑ β j
j=1

There are 7 dummy variables who effect the decision of price in this hedonic model and decision

of purchaser to buy a house or not to buy a house.

Hedonic Regression Table:

V i ,t =β 0 + β 1 depchild + β 2 sft + β 3 agecat + β 4 nssech+ β 5 empst + β 6 freelease+ β7 householdsize +ε

. reg aagfh18 hhsizex ndepchild sft nssech9 empprt3x freeLeas hatentp3

Source SS df MS Number of obs = 13,431

F(7, 13423) = 222.01
Model 1.7345e+09 7 247781462 Prob > F = 0.0000
Residual 1.4981e+10 13,423 1116071.54 R-squared = 0.1038
Adj R-squared = 0.1033
Total 1.6715e+10 13,430 1244638.76 Root MSE = 1056.4

aagfh18 Coef. Std. Err. t P>|t| [95% Conf. Interval]

hhsizex 33.58322 16.16515 2.08 0.038 1.897251 65.26919

ndepchild -84.25036 18.25973 -4.61 0.000 -120.042 -48.45871
sft 163.5358 12.33318 13.26 0.000 139.3611 187.7106
nssech9 -15.01631 2.403937 -6.25 0.000 -19.72836 -10.30425
empprt3x -11.02268 2.192709 -5.03 0.000 -15.3207 -6.724662
freeLeas 43.3459 2.126526 20.38 0.000 39.17761 47.51419
hatentp3 -34.63829 2.769126 -12.51 0.000 -40.06617 -29.21041
_cons 1489.952 41.23783 36.13 0.000 1409.12 1570.784

these results are showing that size of the house, number of full time workers, free or lease house,

will increase the house price. Whereas, number of children, socio economic category, type of

housing will decrease the price of the house. They all are dummy variables in hedonic regression

model.

Vif:

. vif

Variable VIF 1/VIF

hhsizex 5.55 0.180216

ndepchild 3.87 0.258707
empprt3x 1.71 0.583817
sft 1.45 0.689934
freeLeas 1.38 0.725572
hatentp3 1.29 0.773130
nssech9 1.02 0.983790

Mean VIF 2.32

This results are showing the model is free from multicollinearity as the vif value is less than 10.

So there is no issue of multicollinearity.