| Abstract [eng] |
RESIDENTIAL REAL ESTATE MARKET FACTORS Brigita JANONYTĖ Paper for the Master’s degree Business Economics Master’s Program Vilnius University, Faculty of Economics, Finance Department Supervisor - G. Keliuotytė-Staniulėnienė Vilnius, 2020 SUMMARY 66 pages, 9 charts, 22 pictures, 71 references. A measure of the importance of residential real property in a country’s economy is its market value, which is not a constant value because its change is affected by various factors. The market value of a dwelling can be related to the expected amount of money that could be obtained from the sale-purchase transaction on the valuation date. The change in the market value of a dwelling is important for all areas of economic activity related to this property: for construction field – to predict construction costs and profitability of projects; for the state – to price the property managed by it and to set taxes for this property; for banking field – to determine the proportions of potential risks, loans, collateral, and for other concerned parties for whom the market value of a dwelling is relevant. The aim of this research is to analyse and identify the factors affecting the market value of residential real property and to evaluate them by quantitative means. The following tasks have been set to achieve the aim: 1) to substantiate the essence and problem of the market value of real property; 2) to analyse the factors affecting the market value of residential real property from the theoretical point of view; 3) to perform an empirical research on the factors affecting the market value of residential real property; 4) to present the conclusions, proposals and recommendations following the analysis of the factors affecting the market value of real property of residents. Theoretical studies of factors affecting the market value of residential real property have been performed using the methods of systematic and comparative analysis of scientific literature, correlation and regression analysis of quantitative data to determine the relationship between factors affecting the real property market and real property market prices. The theoretical part of the Master’s thesis discusses the aspects of real property as well as market and the market value of this property, explains the cycles and bubbles of formation of the market value of real property. The factors affecting the market value of residential real property are also analysed. The second methodological part of the thesis sets out the research methods used in this work. The research part analyses how real property market prices depend on changes in macroeconomic indicators of the state. Finally, the conclusions of the research are presented. The results of the research showed that with the increase in interest rates and the number of residents, the number of registered new dwellings increases as well. The performed correlation analysis also showed that with the decline in foreign direct investment, the number of registered new dwellings increases. Having performed a pairwise regression analysis, equations were developed that show how a particular singled out factor determines the volume of new dwellings registered. The following results were obtained: if the interest rate increased by 1%, the number of registered new dwellings would increase by 12,208.763; if the number of residents increased by 1, the number of registered new dwellings would increase by 0.210; if foreign direct investment increased by 1 million, the number of registered new dwellings would decrease by 12.030. |
