# What are the most important factors that influence the changes in London Real Estate Prices? How to quantify them?

**Authors:** Yiyang Gu  
**arXiv:** [1802.08238](https://arxiv.org/abs/1802.08238)  
**Date:** 2018-02-22  
**Summary page:** https://www.summarizepaper.com/en/arxiv-id/1802.08238v1/

## Key points

- Real estate industry has gained significant attention globally
- House prices influenced by diverse and complex factors
- Existing views on house prices have limitations and lack theoretical basis
- Objective of research is to develop housing price model for London's real estate market trends from 1996 to 2016
- Proposes countermeasures for controlling house prices
- Analyzing eight key factors impacting house prices from supply and demand perspectives
- Multicollinearity among factors is a challenge, addressed using principal components analysis
- Research provides insights into dynamics of London's real estate market over two decades
- Identifies influential factors for informed policymaking on controlling house prices effectively
- Bridges gaps in existing knowledge on real estate pricing models and offers practical implications for managing housing markets efficiently

## Summary

In recent years, the real estate industry has garnered significant attention from governments and the public worldwide. The prices of real estate are influenced by a diverse and complex set of factors. However, existing views on this matter have limitations and tend to be one-sided, lacking sufficient theoretical basis for understanding the fluctuations in house prices and their influential factors. The main objective of this research is to develop a housing price model that enables a scientific and objective analysis of London's real estate market trends from 1996 to 2016. Additionally, the paper proposes countermeasures aimed at reasonably controlling house prices. The study focuses on analyzing eight key factors that impact house prices from two perspectives: housing supply and demand. By thoroughly examining these factors, the research aims to identify the crucial element contributing to the increase in housing price per square meter. One challenge encountered during this analysis is dealing with high levels of multicollinearity among these factors. To overcome this issue, principal components analysis is employed as a solution. This paper by Yiyang Gu provides valuable insights into understanding the dynamics of London's real estate market over a two-decade period. By identifying and quantifying influential factors, policymakers can make informed decisions regarding measures to control house prices effectively. This research contributes significantly to bridging gaps in existing knowledge surrounding real estate pricing models and offers practical implications for managing housing markets more efficiently. Overall, this study serves as an essential resource for researchers, policymakers, and industry professionals seeking a deeper understanding of London's real estate market trends and effective strategies for regulating house prices.