Incorporating a geographic information system in the hedonic modelling of farm property values

Abstract

To improve the mass valuation methodology of farm properties, a combination of hedonic models and Geographic Information System (GIS) was proposed. This study has three main objectives: Firstly, to present the theories of land value, including the analysis of value factors of farm properties. Secondly, to discuss the major aspects in using hedonic models for valuing farm properties. Thirdly, to investigate the usefulness of GIS analyses to improve the performance of hedonic models in predicting farm property values and to estimate the hedonic price of farm attributes. To achieve these objectives, this study has set two main research components. The first comprised the theories of value, hedonic modelling, and GIS functionality in property valuation. The second was data analysis, which addresses the research issues, including the role of GIS in the spatial analyses of property values and the examination on its ability to improve hedonic modelling. As many as 210 farms of various categories in Ashburton, New Zealand, were used for model estimation and GIS spatial analyses while 24 other farms were used for testing purposes. This study has the following major findings. First, there was some evidence that the predictive performance of the hedonic models with GIS analyses was slightly better than the models without GIS analyses. Second, farm property values were contributed by mainly the productive and consumptive factors. This study was significant to the field of property valuation, in general, and the mass valuation of farm properties, in particular. It has contributed to the theory and application of GIS-hedonic techniques (including data integration and spatial analyses) in this field, which can be expanded in future research. The main problems encountered in this study were discussed and further studies in the areas dealing with similar problems were also suggested.