Dokumentation og international benchmarking af bygge - Danmarks ...

They use the t-value as a guideline whether to use the variables in themodel or not. The t-value should not be less than ±2. Another guideline isto look at the sign of the variable: The sign must be in accordance to theexpected sign. In addition, Sweden states that they try to limit the numberof explanatory variables.Weaknesses with themodelThe main weakness with the hedonic method is that it does not capture allquality improvements. Hence, the hedonic method will, to some extent,tend to overestimate the increase in prices when construction quality isimproving.One weakness with the estimation is the relatively low r-square value(which provides a measure of how well outcomes are likely to bepredicted by the model). In Norway, the r-square value of the estimationis only 0.3 = 30%, which is not considered very high. In Sweden the r-square has varied over time, it has varied within the range 0,20-0,73.Generally, the r-square has been higher for multi-dwelling buildings,compared to one and two-dwelling buildings.Statistics Norway has also commented that it is a challenge to follow upon changes in the building industry e.g. introducing new concepts forwarming up houses etc. If the quality changes are not fully incorporated inthe model, part of the price variation may be explained by quality improvementsand hence the index gets misleading.Sweden, on the other hand, has experienced a rising concern since thenumber of new dwellings has gone down to very low levels in recentyears. This may disturb the stability in the estimations and thus randomfluctuations may occur more easily. It is important that the estimations arerather stable and volatile random fluctuations question the model’s reliability.Measurement andprocessing errorsFor Norway, because of registration delays in GAB, not all detachedhouses registered as completed during the quarter in question are actuallycompleted during this quarter. Average delay measured in 2005 was 1.2months.Concerning the Swedish index the calculation of the multi-dwellingbuildings index (which is included in the Building price index for dwellings)for 1995-2006 is uncertain because of the small number of projects.Further, the number of building permits vary greatly between the years,which contribute to variations of the Building price index for dwellings.In Sweden, the reported cost is the price the investor has to pay for amulti-dwelling building or a collectively built one-or-two-dwelling buildingbased on the tender/contract amount, when available. When this isnot available, the price is based on estimate and this is a potential problemsince it might be hard for the investor to compute an accurate estimate.96