Variation in Property Valuations Conducted by Artificial Intelligence in Japan: A Viewpoint of User’s Perspective

Property valuation services using artificial intelligence (AI) have been developed, with more than 20 services available in Japan. However, since their algorithms and training data are not publicly available, the extent of variations in the AI property valuations among these services is not clear. This study focuses on five services and uses a sample of 4295 valuations for 859 condominium units in six popular residential areas in Tokyo. (1) Multiple comparison tests of the AI property valuations among the services are conducted to confirm their statistical significance and to examine the extent of the variations. (2) The business models of each service are compared to examine the factors contributing to these variations. The results showed that the average variation in the AI property valuations was 10.6%, which was larger than the variations observed in traditional property valuations. It was also found that the valuation groups, categorized as high or low, varied based on the business models of the service providers. These results indicate that it is necessary to promote the healthy development of AI property valuation by establishing guidelines, such as requiring the AI property valuation services to ensure fair prices or disclosing their algorithms and data.