Exploring a pricing model for urban rental houses from a geographical perspective

Abstract

Models for estimating urban rental house prices in the real estate market continue to pose a challenging problem due to the insufficiency of algorithms and comprehensive perspectives. Existing rental house price models based on either the geographically weighted regression (GWR) or deeplearning methods can hardly predict very satisfactory prices, since the rental house prices involve both complicated nonlinear characteristics and spatial heterogeneity. The linear-based GWR model cannot characterize the nonlinear complexity of rental house prices, while existing deep-learning methods cannot explicitly model the spatial heterogeneity. This paper proposes a fully connected neural network–geographically weighted regression (FCNN–GWR) model that combines deep learning with GWR and can handle both of the problems above. In addition, when calculating the geographical location of a house, we propose a set of locational and neighborhood variables based on the quantities of nearby points of interests (POIs). Compared with traditional locational and neighborhood variables, the proposed “quantity-based” locational and neighborhood variables can cover more geographic objects and reflect the locational characteristics of a house from a comprehensive geographical perspective. Taking four major Chinese cities (Wuhan, Nanjing, Beijing, and Xi’an) as study areas, we compare the proposed method with other commonly used methods, and this paper presents a more precise estimation model for rental house prices. The method proposed in this paper may serve as a useful reference for individuals and enterprises in their transactions relevant to rental houses, and for the government in terms of the policies and positions of public rental housing.