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Category ‘Machine Learning’

Machine Learning: Predicting house prices

February 16th, 2017 by

Recently i have followed an online course on machine learning to understand the current hype better. As with any subject though, only practice makes perfect, so i was looking to apply this new knowledge.

While looking to sell my house i found that would be a nice opportunity: Check if the prices a real estate agents estimates are in line with what the data suggests.

Linear regression algorithm should be a nice algorithm here, this algorithm will try to find the best linear prediction (y = a + bx1 + cx2 ; y = prediction, x1,x2 = variables). So for example this algorithm can estimate a price per square meter floor space or price per square meter of garden. For a more detailed explanation, check out the wikipedia page.

In the Netherlands funda is the main website for selling your house, so i have started by collecting some data, i used data on the 50 houses closest to my house. I’ve excluded apartments to try and limit data to properties similar to my house. For each house i collected the advertised price, usable floor space, lot size, number of (bed)rooms, type of house (row-house, corner-house, or detached) and year of construction (..-1930, 1931-1940, 1941-1950, 1950-1960, etc). These are the (easily available) variables i expected would influence house price the most. Type of house is a categorical variable, to use that in regression I modeled them as several binary (0/1) variables.

As preparation, i checked for relations between the variables using correlation. This showed me that much of the collected data does not seem to affect price: Only the floor space, lot size and number of rooms showed a significant correlation with house price.

For the regression analysis I only used the variables that had a significant correlation. Variables without correlation would not produce meaningful results anyway.

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