A critical review of hedonic price model on rental and house prices in housing market

The hedonic price model introduced by Court (1939) was implemented on automobile price regression. Later the model was used for estimation and forecasting. The modification of the hedonic model by Lancaster's (1966) consumer theory and Rosen's theoretical (1974) model, upgraded the model to be extensively used in the scientific investigation of various aspects of housing markets. This paper reviews the theoretical background of hedonic price model and its concept. The paper further reviews the empirical issues of the application of the hedonic on housing and rental prices in the housing market with the critical examination. Previous empirical studies of the effects of physical structural and location of the housing property are identified and reviewed. The study relates the hedonic price model and repeat sales model for the identification of advantages and limitation over the other. The study recommends future research to critical review repeat sales model and another pricing models.