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Methodology – Challenges

The basis of comparison is like – to – like. Meaning, apple to apple and a condo compared to another condo. Otherwise, the comparison becomes meaningless.

Take for example, comparing a semi-D to a condominium would be unfair. The reason is because category type is a distinct element which affects its existence. Like rare species of dog or cat, their value cannot be compared to the strays running freely on the street. In land economics, one of which is land scarcity and thus the higher value of landed properties. A semi-D with big plot of land would be more valuable than a condominium with similar floor space.

How then, is Comparative Index able to overcome the challenges of distinctive differences between categories?

The solution (although imperfect) is to use a mean or average. What this means is to look at an average in a category – like an average semi-D is registering IPI-S of say 60.32, then the test subject semi-D would be compared to this average of the same category.

  • If it is higher than the average, it means the test semi-D is of higher price than normal.
  • If it is lower than the average, then it means the test semi-D is of lower price than normal.

Because the different variables are many e.g. number of rooms, bathrooms, facing sun/hot, etc. Therefore, there can be many elements to build into this index calculation and come out with a mean (average of the area of the same category). After that, it has to be tested in real life setting based on responses of the test subjects, re-adjusted and refined to an accepted level (statistically calculated acceptable confidence interval [ci]).

Through time, these trend might evolve and the team has to continue to monitor this changes so as to keep the system up to date. These are all the challenges in the future. This also open up opportunity to introduce Comparative Index to other trades. The aspiration is to make comparison of variables in a user friendly manner to overcome emotional influence in decision making.

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