Swiss Journal of Economics and Statistics

, Volume 144, Issue 4, pp 679–701 | Cite as

Estimation of Hedonic Models Using a Multilevel Approach: An Application for the Swiss Rental Market

  • Dragana Djurdjevic
  • Christine Eugster
  • Ronny Haase
Open Access


This paper is an empirical application of a hedonic model to determine rents in Switzerland. Unlike traditional hedonic models, we take account of the fact that data are clustered at different levels. The resulting spatial autocorrelation and heterogeneity permits a consideration of different submarkets within Switzerland. For the empirical analysis, we consider the special case of the clustering of apartments at municipality level. Our results show that even after controlling for housing and locational attributes, a significant part of rental differences are still attributable to municipality differences.


hedonic model rental market multilevel modelling 


C14 J16 R31 


  1. Bajari, P., and M. Kahn (2005), “Estimating Housing Demand with an Application to Explaining Racial Segregation in Cities”, Journal of Business and Economic Statistics, vol. 23(1), pp. 20–33.CrossRefGoogle Scholar
  2. Bajic, V. (1985), “Housing Market Segmentation and Demand for Housing Attributes: Some Empirical Findings”, AREUEA Journal, vol. 13(1), pp. 58–75.CrossRefGoogle Scholar
  3. Baranzini, A., J. Ramirez, C. Schaerer and P. Thalmann (2008), “Using the Hedonic Approach to Value Natural and Land Uses in an Urban Area: An Application to Geneva and Zurich”, Economie Publique/Public Economics, vol. 20, pp. 1–21.Google Scholar
  4. Baranzini, A., J. Ramirez, C. Schaerer and P. Thalmann (2006), “Feel it or Measure it — Perceived vs. Measured Noise in Hedonic Models”, Cahier de recherche HES-SO/HEG-GE/C-06/7/1-CH.Google Scholar
  5. Basu, S., and T. Thibodeau (1998), “Analysis of Spatial Autocorrelation in House Prices”, Journal of Real Estate Finance and Economics, vol. 17(1), pp. 61–86.CrossRefGoogle Scholar
  6. Bender, A., B. Gacem and M. Hoesli (1994), «Construction d’indices immobiliers selon l’approche hédoniste», Finanzmarkt und Portfoliomanagement, vol. 8 (4), pp. 522–533.Google Scholar
  7. Berry, S., J. Levinsohn and A. Pakes (1995), “Automobile Prices in Market Equilibrium”, Econometrica, vol. 63(4), pp. 841–889.CrossRefGoogle Scholar
  8. Bryk, S., and S. Raudenbush (2002), Hierarchical Linear Models: Applications and Data Analysis Methods, Second Edition, Sage Publications, Inc., Thousand Oaks, CA.Google Scholar
  9. Fahrländer, S. (2006), “Semiparametric Construction of Spatial Generalized Hedonic Models for Private Properties”, Swiss Journal of Economics and Statistics, vol. 127 (4), pp. 501–528.Google Scholar
  10. Goldstein, H. (1987), “Nonlinear Multilevel Models, with an Application to Discrete Response Data”, Biometrika, vol. 78 (1), pp. 45–51.CrossRefGoogle Scholar
  11. Goldstein, H. (1995), “Multilevel Statistical Models”, Third Edition, Oxford University Press.Google Scholar
  12. Graves, P., J. Murdoch, M. Thayer and D. Waldman (1988), “The Robustness of Hedonic Price Estimation: Urban Air Quality”, Land Economics, vol. 64(3), pp. 220–233.CrossRefGoogle Scholar
  13. Griliches, Z. (1971), “Hedonic Price Indexes Revisited”, in Price indexes and quality change, Federal Reserve Board, Massachusetts, pp. 3–15.CrossRefGoogle Scholar
  14. Hoesli, M., P. Favarger and C. Giacotto (1997), “Real Estate Price Indices and Performance”, Swiss Journal of Economics and Statistics, vol. 133, pp. 29–48.Google Scholar
  15. Quigley, J. (1985), “Consumer Choice of Dwelling, Neighborhood and Public Services”, Regional Science and Urban Economics, vol. 15, pp. 41–63.CrossRefGoogle Scholar
  16. Rosen, S. (1974), “Hedonic Prices and Implicit Markets: Product Differentiation in Pure Competition”, Journal of Political Economy, vol. 82, pp. 34–55.CrossRefGoogle Scholar
  17. Salvi, M., P. Schellenbauer and H. Schmidt (2004), Preise, Mieten und Renditen: Der Immobilienmarkt transparent gemacht, Ed.: Zürcher Kantonalbank, Zürich.Google Scholar
  18. Rieder, T. (2005), „Die Bestimmung der Mieten in der Schweiz — ein hedoni-sches Modell unter Berücksichtigung der räumlichen Struktur zur Analyse der Mietpreise in der Schweiz“, Lizenzarbeit Universität Bern.Google Scholar
  19. Thalmann, P. (1987), «Explication empirique des loyers lausannois», Swiss Journal of Economics and Statistics, vol. 123, pp. 47–70.Google Scholar

Copyright information

© Swiss Journal of Economics and Statistics 2008

Authors and Affiliations

  • Dragana Djurdjevic
    • 1
  • Christine Eugster
    • 2
  • Ronny Haase
    • 2
  1. 1.Wuest & PartnerGenevaSwitzerland
  2. 2.Wuest & PartnerZurichSwitzerland

Personalised recommendations