Real-estate price prediction with deep neural network and principal component analysis

Abstract

Abstract Despite the wide application of deep neural networks (DNN) models, their application over small-sized real-estate price prediction is limited due to the reduced prediction accuracy and the high-dimensionality of the dataset. This study motivates small-sized real-estate agencies to take DNN-driven decisions using the available local dataset. To improve the high-dimensionality of real-estate price datasets and thus enhance the price-prediction accuracy of a DNN model, this paper adopts principal component analysis (PCA). The PCA benefits in improving the prediction accuracy of a DNN model are threefold: dimensionality reduction, dataset transformation and localisation of influential price features. The results indicate that, through the PCA-DNN model, the transformed dataset achieves higher accuracy (90%–95%) and better generalisation ability compared with other benchmark price predictors. The spatial and building age proved to have the most impact in determining the overall real-estate price. The application of PCA not only reduces the high-dimensionality of the dataset but also enhances the quality of the encoded feature attributes. The model is beneficial in real-estate and construction applications, where the absence of medium and big datasets decreases the price-prediction accuracy.