Assessing the Similarity of Local Real Estate Markets – The Use of Taxonomic Methods (Czekanowski Diagram)

In the case of small or underdeveloped local real estate markets, the number of transactions is often insufficient to support the real estate valuation process. Therefore, it is necessary to expand the scope of market analysis. Since the level of socio-economic development influences the structure of the real estate market, it is assumed that this can serve as a basis for identifying similar real estate markets. In this article, similar real estate markets were grouped using a numerical taxonomy method, namely the Czekanowski diagram. The diagnostic features were quantitative in nature and represented categories such as housing and municipal services, population, housing construction, the real estate market, spatial planning, public finance, the labor market, and real estate prices. As a result of the analyses, 26 small towns located in northeastern Poland were classified into typological groups that are more homogeneous in terms of their diagnostic features and thus provide a comparable framework for the functioning of local real estate markets.