Hedonic Pricing Theory

Hedonic Pricing Theory explains how the price of a property is determined by its characteristics, such as location, size, condition, and features. Instead of just valuing the property as a whole, this approach breaks down what makes it desirable and assigns value to each attribute. For example, a house with a waterfront view or a large backyard may be priced higher because these features add value. This helps explain differences in property prices and allows buyers and sellers to understand how specific features influence market value, reflecting the overall attractiveness and utility of the property.