House Price Prediction
Submitted in partial fulfillment of the requirements of the Degree
of
Bachelor of Engineering
In
Computer Engineering
By
Rohit Shelar Roll No.40
Arya Shinde Roll No.41
Guide
Prof.Sandeep More
Department Of Computer Engineering
Watumull Institute of Engineering and Technology
Ulhasnagar-421003
UNIVERSITY OF MUMBAI
Academic Year 2024-2025
CERTIFICATE
This is to certify that the Major Project entitled “House Price Prediction” is a bonafide
work of Rohit Shelar Roll No.40 and Arya Shinde Roll No.41 submitted to the
University of Mumbai in partial fulfillment of the requirement for the award of the degree of
Bachelor of Engineering in Computer Engineering, University of
Mumbai,Academic Year 2024-25
Prof.Sandeep More
Guide
Prof.Nilesh Mehta Prof.Avinash Gondal
Head of Department I/c Principal
Project Report Approval
This Major Project report entitled House Price Prediction by Rohit Shelar and
Arya Shinde is approved for the degree of Bachelor of Engineering in
Computer Engineering, University of Mumbai, Academic Year 2024-25
Examiners
1.
2.
Date:
Place:
Declaration
I declare that this written submission represents my ideas in my own words
and where others' ideas or words have been included, I have adequately cited and
referenced the original sources.I also declare that I have adhered to all principles
of academic honesty and integrity and have not misrepresented or fabricated or
falsified any idea/data/fact/source in my submission. I understand that any
violation of the above will be cause for disciplinary action by the Institute and can
also evoke penal action from the sources which have thus not been properly cited
or from whom proper permission has not been taken when needed.
Signature
Rohit Shelar (40) --------------------------------
Arya Shinde (41) --------------------------------
Date:
Place: Ulhasnagar
INDEX
Sr. No. Topic Page
No
1. Introduction
1.1 Introduction
1.2 Abstract
1.3 Objective
1.4 Scope
2. Problem Definition
2.1 Problem Statement
2.2 Research Gap
3. Literature Review
3.1 Survey Existing Techniques/Solutions
3.2 Merits and demerits
4. Proposed idea/Solution/Algorithm
4.1 Explanation
4.2 Algorithm
4.3 Flow chart / diagrams
4.4 Screen Shots
5. Software and Hardware Requirements
5.1 Details and explanation of hardware and soft wares
6. Result
6.1 Screen Shots of test result or output
7. Explanation of result parameters
7.1 Future enhancement
7.2 Future scope
8. Conclusion
9. Bibliography
10. Acknowledgment
Chapter 1
Introduction
1.1. Introduction
The real estate market is one of the most dynamic and complex sectors in the economy,
with house prices fluctuating based on a multitude of factors such as location, size,
infrastructure, and economic conditions. Accurate prediction of house prices is vital for
various stakeholders, including buyers, sellers, real estate agents, and investors. In recent
years, the availability of large datasets and advancements in machine learning techniques
have enabled more precise price predictions by analyzing historical trends and relevant
features.
This project focuses on building a machine learning model to predict house prices based
on historical data, leveraging various features such as the number of bedrooms, bathrooms,
square footage, and neighborhood attributes. The dataset, which is publicly available,
contains these features that play a significant role in determining the price of a property.
The goal is to explore the use of algorithms like Linear Regression, Decision Trees, and
Random Forest to make accurate predictions, comparing the performance of these models
based on their accuracy and efficiency.
The project's scope goes beyond just predicting house prices; it demonstrates the potential
of data science in solving real-world problems. The approach involves data preprocessing,
feature selection, model training, and performance evaluation. By implementing these
steps, this project aims to help potential buyers and sellers make informed decisions in the
real estate market. Additionally, the model can be refined to include more parameters or
integrated with other market data to improve its accuracy and applicability.
The objective is not only to develop an accurate predictive model but also to explore the
limitations of traditional methods and highlight the advantages of using machine learning
for complex predictions. With this project, we aim to contribute to the growing field of
data-driven decision-making in the real estate sector.
1.2. Abstract
The real estate market is highly volatile and influenced by numerous factors such as
property size, location, and market trends. Accurately predicting house prices is crucial
for buyers, sellers, and investors to make informed decisions. This project focuses on
building a machine learning model to predict house prices using historical data and
key features such as the number of bedrooms, bathrooms, and square footage.
The project utilizes publicly available datasets, applying various machine learning
algorithms, including Linear Regression, Decision Trees, and Random Forest, to
analyze and predict house prices. The model is developed through several stages,
including data preprocessing, feature selection, model training, and performance
evaluation.
By comparing the performance of different algorithms, this project highlights the most
effective approach for accurate price prediction, with a focus on metrics like Mean
Squared Error (MSE) and Root Mean Squared Error (RMSE). The proposed model
demonstrates how machine learning can address real-world problems in the real estate
market, providing stakeholders with a valuable tool for price estimation.
The study also discusses potential future enhancements, such as incorporating
additional economic factors and improving model accuracy with more advanced
techniques. This project serves as a practical implementation of machine learning for
price prediction, emphasizing its relevance in today's data-driven world.
1.3. Objective
The primary objective of this project is to develop a machine learning-based model
that can accurately predict house prices using historical data and key property features.
House price prediction is a complex task influenced by numerous factors such as
location, property size, number of bedrooms and bathrooms, and surrounding
infrastructure. The project aims to use these features to build a predictive model that
can help in estimating the value of a house effectively.
A secondary objective is to explore and compare different machine learning
algorithms, such as Linear Regression, Decision Trees, and Random Forest, in terms
of their accuracy and efficiency. By evaluating the performance of these models using
metrics such as Mean Squared Error (MSE) and Root Mean Squared Error (RMSE),
the project seeks to determine which algorithm is best suited for house price prediction
based on the given dataset.
Furthermore, the project aims to implement an end-to-end solution that involves data
preprocessing, feature selection, model training, and performance evaluation. It also
seeks to address the limitations of traditional regression methods by leveraging more
advanced machine learning techniques, thus enhancing the predictive accuracy.
The overall goal is to create a practical tool that can be used by real estate agents,
investors, or potential buyers to estimate house prices, assisting them in making data-
driven decisions. In the long term, the objective includes building a scalable and
flexible model that can adapt to changes in the real estate market by incorporating new
features, additional datasets, or more advanced algorithms. Through this approach, the
project demonstrates the power of data science and machine learning in solving real-
world challenges within the real estate sector.
1.4. Scope
The project has vast applications, especially for real estate agents, buyers, and sellers
who want to estimate house prices before making decisions. With the growing
reliance on data-driven approaches, this model can also be enhanced further to
incorporate additional features like economic trends, inflation, and demand-supply
metrics.
Chapter 2
Problem Definition
2.1. Problem Statement
The primary challenge addressed in this project is the ability to predict the prices of
houses accurately based on historical data. Real estate prices fluctuate due to various
internal and external factors, and thus, estimating these prices is a difficult task.
The real estate market is highly influenced by multiple factors such as location,
property size, neighborhood quality, and market trends, making accurate house price
prediction a challenging task. Buyers, sellers, and investors often face difficulties in
estimating the true value of a property due to fluctuating market conditions and
numerous influencing variables. Traditional methods of price estimation rely on
manual analysis, which is prone to errors and inefficiencies. This project aims to
address this problem by developing a machine learning model that can predict house
prices based on key property features, offering a more reliable and data-driven
approach for accurate price estimation.
2.2. Research Gap
While many models have been developed for price prediction, most are either outdated
or lack the inclusion of current economic indicators. Furthermore, there is limited
research on the application of advanced machine learning techniques to predict house
prices using comprehensive datasets.
Chapter 3
Literature Review
3.1 Survey Existing Techniques/Solutions
House price prediction is a well-studied problem, with various models and algorithms
proposed to tackle the challenge of accurately estimating property prices. Traditionally,
statistical methods such as linear regression have been employed for this task, using
historical data to identify relationships between house features and their prices. Linear
regression is a simple yet effective approach where the price is modeled as a linear
combination of input variables such as the number of rooms, property size, and location.
However, linear regression often fails to capture complex interactions between variables
and nonlinear relationships, which are common in the real estate market.
More advanced machine learning techniques have emerged in recent years, offering
higher predictive accuracy and robustness. Decision Trees, for instance, are widely used
due to their ability to model complex decision rules and handle non-linearity. Random
Forest, an ensemble method, builds multiple decision trees and averages their outputs,
improving prediction accuracy and reducing overfitting. Another widely adopted model
is Gradient Boosting, which builds a series of weak learners, usually decision trees, and
combines them to minimize prediction errors progressively. These methods have proven
effective for various predictive tasks, including house price prediction, as they can handle
large datasets and capture more intricate patterns in the data.
Another popular approach is Support Vector Machines (SVM), which has been applied
for regression tasks like house price prediction. SVM seeks to find the hyperplane that
best separates the data points while minimizing the prediction error. Although SVM
performs well on structured data, it requires careful tuning of parameters and is
computationally intensive for large datasets.
Deep learning models, particularly artificial neural networks (ANNs), have also shown
potential in house price prediction. ANNs can learn complex patterns and interactions
between features but demand larger datasets and higher computational resources. In
contrast, traditional models like linear regression and decision trees are more interpretable
but less capable of capturing complex dependencies between features.
3.2. Merits and Demerits
The primary merit of traditional techniques like linear regression lies in their simplicity
and ease of interpretation. Linear regression models can be implemented quickly and
provide a basic understanding of how different variables affect house prices. However,
they assume a linear relationship between the dependent and independent variables, which
may not hold true in real-world scenarios, especially in a highly variable domain like real
estate. Moreover, they are less effective at handling multicollinearity and do not perform
well when there are complex, non-linear relationships between the features.
Machine learning models, such as Decision Trees and Random Forest, provide higher
accuracy by modeling non-linear relationships and handling larger datasets. Decision
Trees can capture feature interactions without requiring extensive preprocessing. Random
Forest, as an ensemble method, is robust and reduces overfitting by combining multiple
trees. However, a major drawback of these models is the lack of interpretability. As they
become more complex, it becomes harder to explain how specific features influence the
predicted price.
Advanced methods like Gradient Boosting and SVM can offer better predictive
performance, but they come at the cost of increased computational power and complexity
in parameter tuning. These methods are effective in reducing errors but can be sensitive
to noise in the data, requiring extensive data cleaning and preparation.
Deep learning techniques, while powerful, face several challenges in house price
prediction tasks. They typically require large datasets to perform well and are prone to
overfitting if the dataset is small or lacks diversity. Furthermore, deep learning models are
black boxes, offering little interpretability, which can be a concern when transparency in
prediction is necessary.
In summary, while traditional models like linear regression are fast and interpretable, they
are less effective for complex problems. Machine learning techniques, particularly
ensemble methods like Random Forest and boosting algorithms, offer higher predictive
power but can become computationally expensive and harder to interpret. As the real
estate market involves complex, non-linear interactions between numerous factors,
machine learning models provide a significant advantage in terms of accuracy, though
trade-offs exist in terms of interpretability and computational demands.
Chapter 4
Proposed idea/Solution/Algorithm
4.1. Explanation
The proposed solution leverages a machine learning approach to predict house prices.
The dataset used contains several features like square footage, number of bedrooms,
and location that influence the price. The chosen model is evaluated based on its
accuracy, mean squared error, and root mean squared error.
4.2. Algorithm
In this project, the following algorithm is used:
1. Data Preprocessing: Handle missing data, outliers, and standardize the dataset.
2. Feature Selection: Select relevant features for prediction.
3. Model Building: Use algorithms such as Random Forest or Gradient Boosting.
4. Model Evaluation: Assess the model’s performance using accuracy metrics.
5. Fine-tuning: Optimize the model by tweaking hyperparameters.
4.3. Flow chart
Explanation of Flowchart Steps:
Data Collection: Begin by collecting historical house price data, which includes features
such as number of bedrooms, square footage, and location.
Data Preprocessing: Clean the data by handling missing values, outliers, and normalizing
or standardizing it for consistency. Split the data into training and testing sets for
evaluation.
Feature Selection/Engineering: Choose the most important features that affect house
prices or create new features if needed.
Model Selection: Choose the appropriate machine learning algorithms like Linear
Regression, Decision Trees, Random Forest, or Gradient Boosting for the task.
Model Training: Train the selected models on the training data and fine-tune
hyperparameters for better performance.
Model Evaluation: Test the model's accuracy using evaluation metrics such as Mean
Squared Error (MSE) and Root Mean Squared Error (RMSE).
Model Comparison: Compare the models' performance and select the one with the best
results.
Prediction: Use the final model to predict house prices on new data or unseen data.
Output and Visualization: Visualize the predicted prices vs. actual prices and display key
performance metrics.
Chapter 5
Software and Hardware Requirements
5.1. Details and explanation of hardware and software
Software Requirements:
R Programming Language: Version: Ensure you have the latest stable version of
R installed (e.g., R 4.0 or later).
R IDE:RStudio: A popular integrated development environment for R, which
provides a user-friendly interface for coding, visualizing data, and running
analyses.
R Packages:
• tidyverse: A collection of R packages for data manipulation, exploration, and
visualization (includes dplyr, ggplot2, tidyr, etc.).
• caret: For creating predictive models and evaluating their performance.
• randomForest: For implementing the Random Forest algorithm.
• gbm: For implementing Gradient Boosting Machines.
• lmtest: For testing linear regression models.
• e1071: For implementing Support Vector Machines.
• Shiny (shiny):The core package for building web applications. It allows for
reactive programming where UI elements are updated automatically based on user
inputs or data changes.
Key Features: Provides a framework for creating dashboards and interactive web
interfaces for machine learning models, such as house price prediction models.
Use in Prediction: Shiny serves as the interface for accepting user input like
number of bedrooms, location, square footage, etc., and displaying predicted house
prices.
Chapter 6
Result
6.1. Screen Shots of test result
The expected outcome of this project is a model capable of accurately predicting the
likelihood of house pricing.
GUI:
Dataset:
Price prediction factors:
Chapter 7
Explanation of result parameters
Accuracy: Measures the overall correctness of the model in predicting both
positive and negative classes.
Precision: Evaluates the model’s ability to correctly predict positive instances
Recall: Measures how well the model captures all relevant positive instances.
AUC-ROC: The area under the ROC curve is used to evaluate the model’s ability
to distinguish between classes, particularly useful in imbalanced datasets.
7.1. Future Enhancement
As the field of machine learning and data analytics continues to evolve, there are
several potential enhancements and developments that could significantly improve
the house price prediction model outlined in this project. These enhancements
focus on increasing accuracy, incorporating more features, and adapting to
changing market conditions.
1. Incorporating More Features:
o Economic Indicators: Integrating economic variables such as interest rates,
inflation rates, and unemployment statistics could provide deeper insights into
market trends and help refine predictions. Economic indicators can significantly
influence house prices, and their inclusion could enhance model accuracy.
o Geospatial Data: Utilizing geospatial data such as proximity to amenities
(schools, hospitals, public transport), crime rates, and neighborhood demographics
can provide a more comprehensive view of property values. Geographic
Information Systems (GIS) can be used to analyze spatial data effectively.
o Time-Series Analysis: Incorporating temporal factors such as seasonality and
market trends over time can help capture the dynamics of price fluctuations. A
time-series analysis can provide insights into price trends and future predictions
based on historical patterns.
2. Advanced Machine Learning Techniques:
o Deep Learning Models: Exploring the application of neural networks, particularly
deep learning architectures such as Convolutional Neural Networks (CNNs) and
Recurrent Neural Networks (RNNs), could improve the model's ability to capture
complex patterns and relationships in the data. These models have proven effective
in various prediction tasks, especially when dealing with large datasets.
o Hyperparameter Tuning: Implementing more sophisticated hyperparameter
optimization techniques, such as Grid Search or Bayesian Optimization, could
enhance model performance by fine-tuning the parameters that govern the learning
process.
3. Model Ensemble Techniques:
o Combining multiple models using ensemble techniques like stacking, bagging, or
boosting can lead to improved prediction accuracy. By leveraging the strengths of
various models, ensembles can mitigate weaknesses and enhance overall
performance.
7.2. Future Scope
The future scope of the house price prediction project is vast and encompasses
various dimensions that can enhance its utility, accuracy, and applicability in real-
world scenarios. As technology and data science continue to evolve, the following
areas represent significant opportunities for further development:
1. Expansion to Different Markets:
o The current model can be adapted to predict house prices in different geographic
regions and markets. By customizing the model for specific locations, it can
account for local trends, regulations, and economic factors that influence real
estate prices. This expansion can also involve regional datasets, ensuring that the
model remains relevant and accurate.
2. Inclusion of Rental Market Predictions:
o Extending the model to predict rental prices alongside property sale prices can
provide comprehensive insights for real estate investors and landlords.
Understanding the dynamics of rental markets can help stakeholders make
informed decisions regarding investment properties and rental pricing strategies.
3. Integration of Advanced Data Sources:
o The future scope includes integrating unconventional data sources, such as social
media sentiment analysis, real-time economic indicators, and demographic
changes. Social media trends and user sentiments can provide valuable insights
into community perceptions and preferences, which could influence housing
demand and pricing.
4. Predictive Maintenance and Renovation Impact Analysis:
o Developing predictive models that assess the impact of renovations and upgrades
on property values can be beneficial for homeowners and investors. By analyzing
historical data on renovations, the model can predict how specific improvements
(e.g., kitchen remodels, energy-efficient upgrades) affect house prices, aiding
homeowners in making investment decisions.
Conclusion
The house price prediction project demonstrates the significant potential of machine
learning in addressing the complexities of the real estate market. By leveraging historical
data and key property features, the developed model provides a data-driven approach to
estimating house prices, thereby enabling buyers, sellers, and investors to make informed
decisions. Through rigorous data preprocessing, feature selection, and the application of
various machine learning algorithms, this project showcases the capability of advanced
analytics to derive meaningful insights from vast datasets.
The comparative analysis of different algorithms revealed that ensemble methods, such as
Random Forest and Gradient Boosting, significantly outperform traditional techniques
like linear regression in terms of predictive accuracy. This finding underscores the
importance of utilizing more sophisticated methodologies to capture the inherent
complexities of real estate pricing, where numerous factors interact in non-linear ways.
The project not only highlights the practical implementation of machine learning but also
emphasizes the importance of continuous model evaluation and refinement to maintain
relevance in a dynamic market environment.
Looking ahead, the future scope of this project is vast and promising. By incorporating
additional features, expanding to different markets, and integrating advanced data sources,
the model can evolve to meet the changing demands of the real estate industry.
Enhancements such as mobile applications, predictive maintenance analysis, and
collaborations with real estate agents will further increase its utility and accessibility.
Additionally, the project lays a foundation for future research in related areas, such as
rental market dynamics and the impact of sustainable practices on property values. It opens
avenues for academic partnerships that can foster innovation and address emerging
challenges in housing markets.
In summary, this project serves as a significant contribution to the field of data-driven real
estate analysis. It not only illustrates the effectiveness of machine learning in predicting
house prices but also highlights the broader implications for stakeholders across the real
estate sector. As the landscape of housing continues to evolve, the ongoing development
of this model will be crucial in providing valuable insights and supporting informed
decision-making. Ultimately, the integration of technology and data science into real
estate will play a vital role in shaping the future of housing markets, enhancing both
accessibility and transparency for all participants.
Bibliography
[1] Goh, K. S., & Tan, C. W. (2020). "A Study of Machine Learning Techniques for House
Price Prediction." International Journal of Information Systems and Management, 5(2),
98-107.
[2] Karan, A., & Gunasekaran, A. (2020). "A Hybrid Model for Predicting House Prices:
Evidence from Turkey." Sustainable Cities and Society, 52, 101815.
https://doi.org/10.1016/j.scs.2019.101815
[3] R Documentation for the caret package: https://cran.r-
project.org/web/packages/caret/caret.pdf
[4] Towards Data Science. (2021). "House Price Prediction Using Machine Learning: An
End-to-End Project." Retrieved from https://towardsdatascience.com/
[5] Kaggle. "House Prices: Advanced Regression Techniques." Retrieved from
https://www.kaggle.com/c/house-prices-advanced-regression-techniques/data
[6] UCI Machine Learning Repository. "Housing Data Set." Retrieved from
https://archive.ics.uci.edu/ml/datasets/Housing
[7] Hwang, J., & Kim, S. (2021). "Deep Learning Techniques for Predicting House Prices:
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Roy, S. (2023).
Acknowledgment
We would like to express our sincere gratitude to Prof. Sandeep More, our project
guide, for his invaluable guidance, support, and encouragement throughout this project.
His expertise and insightful feedback helped us navigate the complexities of credit risk
modeling, and his advice was crucial in shaping the project's direction.
We are also grateful to Prof. Nilesh Mehta, Head of the Department, for providing us
with the necessary resources and a conducive environment to complete this project. His
encouragement and belief in our abilities kept us motivated during the course of our
work.
We extend our thanks to the Watumull Institute of Engineering and Technology for
providing us with the facilities required to carry out this project. The infrastructure and
support from the institution played a pivotal role in ensuring the smooth execution of our
research.
Our heartfelt thanks go out to our family and friends, whose unwavering support and
understanding allowed us to dedicate our time and effort toward completing this project.
Their encouragement was a constant source of strength.
Lastly, we would like to acknowledge the contributions of our fellow students, whose
discussions and ideas enriched our understanding and helped us tackle challenges more
effectively.
We are truly grateful to all those who have contributed, directly or indirectly, to the
successful completion of this project.
