Chapter 11: An Inclusive Indicator to Measure the Contextual Factors Influencing the Price of Real Estate: A Study on Genoa in Italy

The real estate market shows a number of distinctive features that are yet to be clearly understood at the theoretical level, because of the extreme complexity of its nature of both financial instrument and mere commodity. Moreover, as we know, a long lasting speculative bubble in the housing market was one of the main causes of the great recession. The aim of this chapter is to generate an index to explain how inclusive contextual factors influence the price level of real estate in Genoa, Italy. The authors use the non-parametric methodologies of factor analysis and cluster analysis. The results of the analysis suggest that most of the variability in the fluctuation of the average price of properties is strictly connected to the features of the reference context (such as neighbourhood prestige, type and level of education of residents, access to services, etc.). However, the percentage of unjustified price variability is assumed to refer to the incidence of the intrinsic variables of the estate assets.