A hedonic assessment of the relative importance of structural, locational and neighbourhood factors on advertised rents in Malta
International Journal of Housing Markets and Analysis
ISSN: 1753-8270
Article publication date: 2 April 2021
Issue publication date: 10 January 2022
Abstract
Purpose
The private rental market in Malta has expanded significantly in recent years, but as at 2020, no official rent index is yet published. This paper aims to construct such an index and explores the relative importance of structural, locational and neighbourhood factors to advertised rents.
Design/methodology/approach
The authors compile hedonic indices for advertised rents in Malta collected from publicly available sources using webscraping techniques. The database comprises more than 25,000 listings with information on various property attributes. Hedonic regressions are estimated using ordinary least squares and rent indices are computed using three alternative methods: the time dummy method, the rolling time dummy method and the average characteristics method. For the latter, indices are computed using the Laspeyres, Paasche and Fisher methods.
Findings
The results from the hedonic indices indicate that the annual growth rate in advertised rents was slowing down during 2019, albeit still remaining relatively high, while in 2020, advertised rents contracted sharply, amplified by the effects of COVID-19. The findings also reveal that advertised rental prices are significantly influenced by various structural, locational and neighbourhood factors.
Originality/value
This paper introduces the first rent index in Malta that will be used to monitor developments in the rental segment of the housing market and for financial stability purposes given the share of buy-to-let properties. It also provides various elasticities on the impact of property attributes on advertised rents in Malta. Finally, the study contributes to the literature on the effect of foreign-born residents on advertised rents.
Keywords
Acknowledgements
The authors would like to thank Dr Aaron G. Grech for his comments and suggestions in the drafting of this work. Helpful comments by participants in an internal seminar at the Central Bank of Malta and three anonymous referees are also gratefully acknowledged. The views expressed in this paper are those of the authors and do not reflect those of the Central Bank of Malta. Any errors are the authors’ own.
Citation
Micallef, B., Ellul, R. and Debono, N. (2022), "A hedonic assessment of the relative importance of structural, locational and neighbourhood factors on advertised rents in Malta", International Journal of Housing Markets and Analysis, Vol. 15 No. 1, pp. 203-230. https://doi.org/10.1108/IJHMA-11-2020-0141
Publisher
:Emerald Publishing Limited
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