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Accuracy and determinants of self-assessed euro area house prices

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  • Le Roux, Julien
  • Roma, Moreno

Abstract

Using microdata from the second wave of the Household Finance and Consumption Survey, we investigate the accuracy of property values estimated by homeowners - so called “self-assessed” house prices - and explore the drivers of possible deviations of these prices from official hedonic house price indices. We find evidence that euro area homeowners overestimate the value of their properties by around 9%. Across the largest euro area countries, the overestimation lies in a range between 3.2% in Germany and 22% in Italy. Household characteristics, including the level of indebtedness, appear to explain significant discrepancies between hedonic and self-assessed house price indices, while the limited available data related to property characteristics are generally not affecting this gap. For the euro area, we find that higher self-assessed house prices are associated with a mild increase in consumption expenditures. JEL Classification: E31, C21, O18

Suggested Citation

  • Le Roux, Julien & Roma, Moreno, 2019. "Accuracy and determinants of self-assessed euro area house prices," Working Paper Series 2328, European Central Bank.
    • Handle: RePEc:ecb:ecbwps:20192328
    Note: 3182505
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    File URL: https://www.ecb.europa.eu//pub/pdf/scpwps/ecb.wp2328~119c7e6f25.en.pdf
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    References listed on IDEAS

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    Cited by:

    1. Arthur B. Kennickell & Peter Lindner & Martin Schürz, 2022. "A new instrument to measure wealth inequality: distributional wealth accounts," Monetary Policy & the Economy, Oesterreichische Nationalbank (Austrian Central Bank), issue Q4/21.

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    More about this item

    Keywords

    house prices; micro data; quantile regressions; under/overvaluation; wealth effects;
    All these keywords.

    JEL classification:

    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • C21 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models
    • O18 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Urban, Rural, Regional, and Transportation Analysis; Housing; Infrastructure

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