A Spatial Econometric Approach about the Hedonic House Prices in Mainland Portugal

The lack of stability that characterizes the house market encourage a discussion about the main drivers of real estate valuation. Modelling it has for long been recognized as a central investigation area. Using STATA software, this dissertation is based on an empirical analysis of the role of locational amenities and socioeconomic attributes of neighbourhoods that may affect and be responsible for the price that is attributed to residential houses. This study focuses on the median house price in the 278 municipalities of mainland Portugal, between 2016 and 2020. The housing market was modelled in a spatial econometric context using the Spatial Durbin Model and then examining the effect of contiguous municipalities using a weighting matrix. The results show evidence of spatial autocorrelation between real estate prices, proving that the placement of each region plays a critical role. The same results show that variables such as salary, the number of hospitals, the number of tourist accommodations and cultural spaces significantly increase housing prices.