Spatial autocorrelation and valuation accuracy: a neglected methodological problem

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Abstract
Geographical location is a fundamental characteristic of property. Any methodology concerned with assessing valuation accuracy must incorporate location explicitly into its diagnostic procedures. In an econometric framework an obvious issue is the possible presence of spatial autocorrelation in regression errors. It is suggested that the literature of spatial statistics offers readily applicable concepts and procedures to analyse this problem. Utilization of these helps to illustrate the shortcomings of a non-spatial econometric approach. Notwithstanding this the spatial analysis suggested here is but a special case of approaches to a broader set of spatial-temporal problems.

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