Property Prices in the UK - Coursework Example

Property PricesIntroductionThis paper reports on a hypothesis test that assessed whether there was a significant difference in mean prices between two property trading sites: property news and property live. A total sample of 15 houses prices, 8 house prices from propertynew.com and 7 house prices from propertylive.co.uk, were used in the study. We needed to formulate our null hypothesis: an objective which the study was meant to achieve. That is, supposing the sampled prices were true representative of entire population, we needed inspect whether a significant difference existed in means, with respect to the two property prices, at 95% confidence interval.

Thus, our null hypothesis and alternative hypothesis were as follows: H0: μw = μl (No significant difference in the two means)H1: μw ≠ μl (A significant difference exist between the two mean)Test methodsA t-test was used to ascertain whether the price data vary vastly, with regard to our assertion or it is steady. We opted for a t-test because, according to Dalgaard (2008), it is best suited for this work and it is ease to interpret. From the results of two sample, t-statistics tells how the mean of one population sample deviate from the mean of another population sample.

It interprets the average of each property price and the mean difference between the two property sits. Moreover, t-test gives an explanation as to whether the difference in mean is statistically significant or not especially if the two populations, where the sample prices were gathered, have similar means. We tabulated the sample prices for propertynews (sample w) and the sample prices for propertylive (sample l) and then calculated the relevant summary statistics using STATA. The results were as displayed in Table 1. Table 1. Prices for two property sitesHouse locationPrices for propertynews (£)Prices for propertylive (£)Ascot Gardens,189293St Aubyn Street30,00029,200Hoolywood Avenue130132Cloughey129183Begonvillia Court30,00033,000Circular Road, Belfast 285,000276,000Parkgate Road175,000174,500Parkgate Road165,400-Mean (uw)85731Mean (ul)73329.

71Variance ( sw2)108370.3Variance (sl2)108725.4Sample w size (nw)8Sample l size (nl)7The variance of difference for the two means (sd2) was calculated as follows:sd2 = (sw2 / nw) + (sl2 / nl) = (108370.3/8) + (108725.4/7) = 13546.29 +15532.2sd2 = 29078.49 Therefore, sd = √29078.49 = 170.52 Our calculated t-statistics was therefore given as: t = (μw – μl)/ sd = (85731 - 73329.71)/ 170.52 = 72.73However, the tabulated t-value, at 13 degrees of freedom (8 + 7 -2) is given as 1.7709.

Since the calculated t-statistics > the tabulated t-statistics, we reject Ho and conclude that the two means for the two property prices are significantly different at 5% significance level. Conclusion In summary, the paper has given a report on the hypothesis test that assessed whether there was a significant difference in mean prices between two property trading sites: property news and property live. The total sample used was 15 houses prices: 8 house prices from propertynew.com and 7 house prices from propertylive.co.uk.

References ListDalgaard, P. (2008). Introductory statistics with R. New York: Springer.