Analyse house prices against all other variables
Case Study- Shiraz is a (fictitious) local government area (called a ‘city’) within greater Melbourne, Australia. It consists of some different suburbs, all with their history of development. The city grew in different stages, with new suburbs gradually emerging. It covers some wealthy suburbs and some not so wealthy. The city is located on the Bay and about 60,000 people live in the suburbs of Shiraz.
The main objective is to conduct exploratory, descriptive and regression analysis to gain a comprehensive understanding of house prices in the Shiraz region and an understanding of the most important factors that impact prices. Your analysis will be based on a random sample of 120 houses from the city. Note that for the purpose of the assignment the unit of analysis is a ‘House’. It is defined as a stand-alone dwelling. That is, flats, apartments, etc. are not included in the database.
The Data
The cross-sectional data collected contains a number of categorical and numerical variables which are described below:
| Variable Name | Description |
| Price | Selling price of house in $’000 |
| Rooms | Number of main rooms in the house |
| Lot Size | Area of the block of land (lot) in square metres |
| Age | Age of the house in years |
| Area | Area of the house in square metres |
| To Train | Distance of the house to the nearest train station (kilometres) |
| To Bus | Distance of the house to the nearest bus stop (kilometres) |
| To Shops | Distance of the house to the nearest shopping centre (kilometres) |
| Street | Street appeal as evaluated by the real estate agency: |
| ranges from 0 (lowest appeal) to 10 (highest appeal) | |
| Storeys | Number of storeys or levels in the house |
| Style | Style of the House |
| Bedrooms | Number of bedrooms |
| Bathrooms | Number of bathrooms |
| Heating | Central or other heating system installed |
| Kitchen | Style of kitchen |
|
AirCon |
Air conditioning installed: No AC (No AirCon) = 0, AC (Yes AirCon) = 1 |
| Bay Views | Proportion of views of the Bay from a prominent part of the property: |
| ranges from 0 = Nil views up to 1 = Full views | |
| Weekly Rent $ | Actual or estimated weekly rent in $. |
In addition, time series data is available on Quarterly Median House Prices
| Time Period | Time Period Index |
| Quarter | Quarter Description |
| Median House Price ($’000) | Median House price in $’000 |
Task One – Summary of House Prices
Only analyse Price by itself. The importance of other variables is considered in other tasks. You should, at the very least, thoroughly investigate relevant summary measures (and their reliability) for this variable. Also, there may well be suitable tables and graphs that will illustrate, further and more clearly, other important features of house prices. In your report you should comment, where relevant, on data location, central tendency, variability, shape and outliers for this variable.
Task Two – Factors influencing house prices
Analyse house prices against all other variables included in the dataset. Use appropriate descriptive techniques such as cross-tabulations, comparative summary measures, scatter diagrams to identify key relationships. In your report you should only include the most important factors that impact house prices (approximately between 3 – 5 factors).
Task Three – Development of a multiple regression model for house price
You should follow the model building process outlined in topic 5. You are only required to consider linear relationships in the model. Each stage of developing your model should be included in your analysis. You will notice in the Shiraz spreadsheet that there are tabs called Q3.1, Q3.2, etc. These are where you place each version of your model. Note that if you have undertaken more iterations of the model then add more worksheets.
The report should only include your final model and a description of its overall strength as well as the influence of each variable.
Task Four – Time series analysis
Quarterly median house prices in Shiraz from Q1, 2012 to Q4, 2015 are given in QtrPriceData worksheet. Develop a multiplicative time series model to forecast median house prices for the next 4 quarters (Q1, 2016 to Q4, 2016).
If the observed values for those 4 quarters are as below, calculate the MAPE of the forecast.
| Time Period | Quarter | Observed |
| 17 | 2016-Q1 | 950 |
| 18 | 2016-Q2 | 1320 |
| 19 | 2016-Q3 | 1500 |
| 20 | 2016-Q4 | 1090 |
Task Five – Critique the Business Research Approach
Discuss the suitability of the general business research approach taken. In your response, include possible alternative approaches and other sources of (secondary) data. If the analysis was to be repeated in the future, would you recommend a different approach? Note that no actual analysis is required for this task.
