ABSTRACT
This chapter is concerned with the variable specification of the hedonic model, and some of the problems encountered with modelling such data. It argues that the measurement of these variables often fails to take into account the complexity of effects influencing house price, especially with respect to locational attributes, and underestimates the problems associated with the measurement of spatial data in general. The chapter deals with the types of attributes that affect house prices, with particular attention towards the concept of locational externalities. It also deals with the measurement of housing attributes, with the emphasis upon the inconsistencies with regards locational attributes. The chapter discusses the problems encountered with modelling spatial data using the hedonic price function, and how this has been historically limited by the resolution of the data. Under the Mingche & Brown classification, environmental quality can be regarded in terms of the aesthetics of the local area, the pollution levels and also proximity to local amenities.
