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Alternative Approaches to Measuring House Price Inflation

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  • Diewert, Erwin

Abstract

The paper uses data on sales of detached houses in a small Dutch town over 14 quarters starting at the first quarter of 2005 in order to compare various methods for constructing a house price index over this period. Four classes of methods are considered: (i) stratification techniques plus normal index number theory; (ii) time dummy hedonic regression models; (iii) hedonic imputation techniques and (iv) additive in land and structures hedonic regression models. The last approach is used in order to decompose the price of a house into land and structure components and it relies on the imposition of some monotonicity constraints or exogenous information on price movements for structures. The problems associated with constructing an index for the stock of houses using information on the sales of houses are also considered.

Suggested Citation

  • Diewert, Erwin, 2011. "Alternative Approaches to Measuring House Price Inflation," Economics working papers erwin_diewert-2011-1, Vancouver School of Economics, revised 07 Jan 2011.
    • Handle: RePEc:ubc:bricol:erwin_diewert-2011-1
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    File URL: http://faculty.arts.ubc.ca/diewert/dp1010.pdf
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    Citations

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    Cited by:

    1. repec:grz:wpaper:2015-05 is not listed on IDEAS
    2. Robert J. Hill & Miriam Steurer, 2020. "Commercial Property Price Indices and Indicators: Review and Discussion of Issues Raised in the CPPI Statistical Report of Eurostat (2017)," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 66(3), pages 736-751, September.
    3. Robert J. Hill & Michael Scholz & Chihiro & Miriam Steurer, 2020. "Rolling-Time-Dummy House Price Indexes: Window Length, Linking and Options for Dealing with the Covid-19 Shutdown," Graz Economics Papers 2020-14, University of Graz, Department of Economics.
    4. Olivier Schöni, 2014. "Asymptotic Properties of Imputed Hedonic Price Indices," SERC Discussion Papers 0166, Centre for Economic Performance, LSE.
    5. Robert J. Hill & Michael Scholz & Chihiro Shimizu & Miriam Steurer, 2018. "An evaluation of the methods used by European countries to compute their official house price Indices," Economie et Statistique / Economics and Statistics, Institut National de la Statistique et des Etudes Economiques (INSEE), issue 500-501-5, pages 221-238.
    6. Esmeralda A. Ramalho & Joaquim J.S. Ramalho, 2014. "Convenient links for the estimation of hedonic price indexes: the case of unique, infrequently traded assets," Statistica Neerlandica, Netherlands Society for Statistics and Operations Research, vol. 68(2), pages 91-117, May.
    7. repec:grz:wpaper:2014-05 is not listed on IDEAS
    8. Sabrina-Sigrid Spiegel, 2022. "Price Indices for Austrian municipalities - Hedonic models based on Microlevel Data," Graz Economics Papers 2022-01, University of Graz, Department of Economics.
    9. Rolf Färe & Shawna Grosskopf & Robin C. Sickles & Chenjun Shang, 2019. "Pricing Characteristics: An Application of Shephard’s Dual Lemma," World Scientific Book Chapters, in: Pricing Non-marketed Goods using Distance Functions, chapter 8, pages 63-86, World Scientific Publishing Co. Pte. Ltd..
    10. Schöni, Olivier, 2014. "Asymptotic properties of imputed hedonic price indices," LSE Research Online Documents on Economics 64500, London School of Economics and Political Science, LSE Library.

    More about this item

    Keywords

    Property price indexes; hedonic regressions; stratification techniques; rolling year indexes; Fisher ideal indexes;
    All these keywords.

    JEL classification:

    • C2 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables
    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • C43 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Index Numbers and Aggregation
    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • R21 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Housing Demand

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