An Empirical Analysis on the Effect of Apartment Complex Characteristics on Their Sales Prices

Apartments represent the most significant asset for general households, serving not only as current residential services but also as a means of storing future value and eventually functioning as an inheritance. Therefore, research on the pricing of such assets has been continuously conducted over centuries. This study focuses specifically on the characteristics of apartment complexes. Our analysis empirically investigates the effects of apartment complex characteristics on unit-level apartment transaction prices in Gangnam district, Seoul, Korea. Employing apartment sales price data from 2021 to 2024 (36 months of total population), the analysis attempted to model important qualitative apartment complex-level characteristics, including complex size, degree of large-area-sized unit distribution, variety of floor plans and layouts, and neighborhood apartment density. Factor analysis was used to construct measurable variables that reflect complex-level characteristics. A two-level mixed-effects model was employed to estimate both basic unit-level and higher complex-level variables at the same time. We find that these four measured apartment complex characteristics have statistically significant effects on the price of apartments. In addition, the measured variables improved the model’s goodness of fit measure and behavioral explainability. Our study’s findings, which are seriously ignored in previous housing price literature, make a significant contribution to explaining housing market dynamics.