Housing price prediction - Machine learning and geostatistical methods
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Department of Real Estate and Urban Studies, University of Warmia and Mazury in Olsztyn, Poland
Submission date: 2024-04-18
Final revision date: 2024-07-29
Acceptance date: 2024-09-29
Corresponding author
Radosław Cellmer
Department of Real Estate and Urban Studies, University of Warmia and Mazury in Olsztyn, Poland
HIGHLIGHTS
- complex models predict housing prices better than classical statistical models
- use of geostatistics in machine learning improves accuracy of price forecasts
- local factors can be directly incorporated into the model with appropriate maps
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ABSTRACT
Machine learning algorithms are increasingly often used to predict real estate prices because they generate more accurate results than conventional statistical or geostatistical methods. This study proposes a methodology for incorporating information about the spatial distribution of residuals, estimated by kriging, into selected machine learning algorithms. The analysis was based on apartment prices quoted in the Polish capital of Warsaw. The study demonstrated that machine learning combined with geostatistical methods significantly improves the accuracy of housing price predictions. Local factors that influence housing prices can be directly incorporated into the model with the use of dedicated maps.