Comparing multilevel modelling and artificial neural networks in house price prediction

Two advanced modelling approaches, Multi-Level Models and Artificial Neural Networks are employed to model house prices. These approaches and the standard Hedonic Price Model are compared in terms of predictive accuracy, capability to capture location information, and their explanatory power. These models are applied to 2001-2013 house prices in the Greater Bristol area, using secondary data from the Land Registry, the Population Census and Neighbourhood Statistics so that these models could be applied nationally. The results indicate that MLM offers good predictive accuracy with high explanatory power, especially if neighbourhood effects are explored at multiple spatial scales.