The validity of owner-reported property cost as a measure of property values in a developing real estate market, Cameroon
The paucity of objective indicators of property values is pervasive in developing countries. This necessitates the use of proxy measures. However, there are huge gaps in knowledge on the validity of such measures. The main objective of the study reported here is to contribute to efforts aimed at closing these gaps. It does so by testing the validity of ‘owner-reported property cost’ as a measure of property value. Procedurally, a double log-linear model based on data from Cameroon is used to determine the tenability of ‘owner-reported property cost’ as a function of known covariates or attributes of property value (e.g., bedrooms, floors, building area and plot size). The attributes or traits are shown to be statistically significant (p =< 0.000) predictors of ‘owner-reported property cost’. It is concluded that the owner-reported cost of a property constitutes a valid proxy-measure of its value. Four potential practical applications of the model incorporating this proxy measure and relevant covariates are discussed. First, researchers can use the model where there is a dearth or absence of conventional measures. Second, planning authorities can use it to assess building permit fees and/or real property taxes. Third, the model can be used as a parametric building cost estimator. Finally, the model can serve as a proxy equation that can be used by valuation surveyors to estimate the replacement or reproduction cost of buildings in relevant submarkets.
Keywords: building valuation; building permit; hedonic model; housing trait prices; owner-reported real property cost