Formation of housing rental prices in Machala, Ecuador: Hedonic prices analysis

In Ecuador, the housing prices have been rising sharply in recent years due to external and internal factors of the region. In this study, an analysis is performed on the real estate market in the city of Machala. The hedonic prices method was used to explain the setting of prices for rental housing for the year 2013. To cushion the problem of omitted variables a heteroskedastic frontier regression model is used. Social, environmental, demographic, financial, variables, among others were used. Significant results were found in the environmental variables, such as the type of water supply, distance to central park (green areas), and waste disposal. Rental prices of houses with irregular water supply are 5.79% lower compared to those with a regular supply. In addition, households for which the method of waste disposal is through the municipal service, pay on average, 3.58% more rent than those that do not have this. The houses near the central park are the most valued, as such for every 100 away metres from the city centre, rental prices decrease on average by 5%. Households where life environment is good, rent more expensive properties. (C) 2015 Asociacion Cuadernos de Economia. Published by Elsevier Espana, S.L.U. All rights reserved.