Belo Horizonte’s real estate valuation, 1995-2012: a hedonic-quantile approach

Abstract

This paper estimates quantile hedonic price indexes for apartments in Belo Horizonte, Brazil, 1995-2012. From an urban economic point of view, the real estate is one example of a segmented market and for this reason we choose the quantile regression approach. The several results suggest that before 2004, when there was a lack of institutional mark for the real estate mortgages and macroeconomics environment was too uncertain, there a little appreciation in apartments prices. In this period there wasn’t a regular pattern in quantile appreciation. Since 2005, there was a great appreciation of apartments in all segments of the market, since the real estate mortgage increases due to the reformulation of the real estate mortgage institutional market. Before 2009, the appreciation was more pronounced in the highest segments. Since 2009, there was a reversion of the quantile appreciation pattern. The appreciation in lowest segments was higher than in the highest. Partly, this change can be attributed to countercyclical policies implemented by Brazilian Government which focus on families with medium and low incomes.

Keywords:
real estate market; price indexes; hedonic prices; quantile regression