House Price Indices

 

Real Estate Indicators and Financial Stability

In 2003, well before the current crisis, the International Monetary Fund and The Bank of International Settlements organized a conference to discuss and explore the theoretical and practical issues underlying the development and use of Real Estate Indicators in assessing financial stability. Real estate prices are part of the Financial Soundness Indicators (FSIs) because of their importance in understanding the strengths and risks of financial systems. However, the identification and collection of statistical data on real estate markets had not received much emphasis. The papers presented at that conference made a start of identifying experiences of different countries, aggregation and methodological issues and areas of future work. See the BIS website for links to the 2003 conference papers.

In 2006, OECD and IMF organized a follow up workshop that honed in on who should collect such real estate price data and the fundamental problems in the construction of constant quality price indexes: depreciation and renovations to structures that complicate the usual matched model methodology for construction prices. Methods were discussed to deal with these problems. Proceedings and papers are provided in the OECD web page for the 2006 workshop.

In November 2009, after the financial crisis, the G-20 finance ministers and central bank governors endorsed 20 recommendations to address information gaps described in the report “The Financial Crisis and Information Gaps” prepared by the Financial Stability Board (FSB) Secretariat and International Monetary Fund (IMF) staff. One of the identified information gaps was real estate price indices. It was proposed to develop a handbook on real estate price indices and a conference was organized by Eurostat-IAOS to outline the work. See the European Commission website for links to the 2009 conference documents.

The FSB Secretariat and the IMF staff reported back by June 2010 with a concrete plan of action in "The Financial Crisis and Information Gaps: Progress Report--Action Plans and Timetables" of 2010. Because of the importance of real estate price indices for the stability of housing finance systems we provide here the links to the Conference papers of 2003, 2006, and 2009, the draft Handbook on Real Estate Price Indices prepared by Eurostat, and the BIS compilation of the different real estate price indices currently available. It is interesting to note that only 40 countries compile some form of real estate price index and that the types of indices differ widely, even within one country.  

- HANDBOOK on Residential Property Price Indices  
Handbook on Residential Property Price Indices (RPPI) is a Eurostat publication that gives recommendations on best practice for compiling residential property price indices and presents these in the context of the different user needs for such indices. The Handbook builds on work undertaken at a number of international meetings over recent years to identify the requirements for improved data on property prices from an economic, monetary and financial stability perspective. 

- STATISTICS
The Property Price Statistics, compiled by the BIS with the assistance of its member central banks, currently include data from 40 countries, and are available at different frequencies. The data differ significantly from country to country, for instance in terms of sources of information on prices, type of property, area covered, property vintage, priced unit, detailed compilation methods and seasonal adjustment.
See the BIS website for a link to the Property Price Statistics spreadsheet. 

- Global Housing Watch
The Global Housing Watch, provided by the IMF, tracks developments in housing markets around the world on a quarterly basis. It provides up-to-date data on house prices as well as metrics used to assess valuation in housing markets, such as house price-to-rent and house-price-to-income ratios. 

- CONFERENCES / WORKSHOPS

- 2003
Real Estate Indicators and Financial Stability, International Monetary Fund and the Bank for International Settlements Joint Conference, 27-28 October 2003, Washington, D.C. Individual presentation papers and the full text can be downloaded here.

- 2006
Real Estate Price Indexes,  OECD-IMF Workshop, 6-7 November 2006, Paris, France. Individual presentation papers can be downloaded here.

- 2009
Residential Property Price Indices, Eurostat-IAOS-IFC Conference, 11-12 November 2009, Basel, Switzerland. Individual presentation papers can be downloaded here.

-Marja Hoek-Smit

 

 

List of Indices in Selected Countries

Brazil
FipeZap Index calculated by the Brazilian Institute of Economic Research (FIPE) based on advertisements (offered prices) on the ZAP website since December 2007.Similar sources are used in Austria, England, Hungary, Malta, and the United States. Laspeyres-type index based on weighted medians for stratifications based on location and number of bedrooms for second hand apartments. Link

China
The Wharton/NUS/Tsinghua Chinese Residential Land Price Indexes (CRLPI) reports series on real constant quality land prices across 35 major markets in China. See their white paper for more information on the underlying data and technical issues in the creation of the index. All are welcome to use their data which is located on their website. Link 

Dubai 
The Colliers International House Price Index was established in January 2008 by Colliers International U.A.E. and six leading banks / financial institutions in the Emirate of Dubai to provide statistics specifically designed to reflect the average growth / decline rate of house prices across certain foreign ownership areas of Dubai, United Arab Emirates.Indexes for villas, townhouses, and apartments are developed using a mix-adjusted (weighted average) method.Data are provided by six participating banks, including: HSBC Bank Middle East Limited, Barclays Bank PLC, Amlak Finance PJSC, Dubai Islamic Bank, Emirates NBD, and Standard Chartered Bank. Link

France 
INSEE Index calculated by National Bureau of Statistics (INSEE) using the notaries database on transactions. All real estate transactions are passed utilizing notaries, who are responsible for property titles. Notaries database presently includes approximately 60 percent of transactions on a voluntary basis, but will soon be compulsory by law. Second-hand housing only, covering apartments and houses at the national level, for 3 regions. Additional indices are calculated by notaries, but are not approved by INSEE. Indices are based on hedonic methods. The Fédération Nationale de l’Immobilier (FNAIM) compiles statistics and indices of transaction prices of properties sold through FNAIM-affiliated real estate agencies. INSEE just released an index for new housing based on developers’ data, and an overall new and second-hand index. 

Anne Laferrère, “Hedonic Housing Price Indexes: The French Experience,” BIS Papers, No. 21. Link

INSEE, Chapter 7, “Housing Price Index Methods: Alternative Calculation Methods”  Link

Mexico
House price indices developed by Sociedad Hipotecaria Federal (SHF).Based on appraisal data collected by SHF in their role as regulator of the appraisal industry. Indices for selected cities and municipalities. Link

Morocco 
Real Estate Price Index (REPI) developed by the Central Bank of Morocco (Bank Al Maghrib) and the Central Agency for Land Registration, Cadastre, and Mapping (ANCFCC). Based on database of property registrations for existing housing.Repeat sales model.National and regional indices by category for houses, villas, and apartments for the whole country, regions, and 10 larger cities. 

El Mahmah Assil, “Constructing a Real Estate Price Indices: The Moroccan Experience,” Bank Al Maghrib, June 2012. Link
 
Philippines 
The Bangko Sentral ng Pilipinas (BSP) released residential real estate price indices (RREPI) which could serve as a measure in assessing the trends in housing prices. Under BSP Circular No. 892 dated 16 November 2015, the BSP requires all universal/commercial banks (UBs/KBs) and thrift banks (TBs) in the Philippines to submit bank quarterly report on Residential Real Estate Loans (RRELs) granted for the generation of RREPI. Out of the 109 banks covered, 93 banks or 85.3 percent (consisting of 40 U/KBs and 53 TBs) submitted their reports to the BSP during the first quarter of 2016Link

Qatar 
The Qatar Central Bank (QCB) recently launched a real estate price index to track price movements in real estate since August 2006.The index is based on real estate transactions data from the real estate registrations division of the Ministry of Justice.Although based on monthly data, the QCB lacks data on key hedonic factors such as location, age of buildings, number of rooms, and available amenities, so that a mix-adjusted (weighted average) index was developed.Separate indexes are provided for villas, land, residential, and overall price movements.The index is described in the QCB Financial Stability Review. Link

Thailand 
House price indices developed for Government Housing Bank (GHB) of Thailand, now published by the GHB Real Estate Information Center and the Bank of Thailand.Based on hedonic models using appraisal data for mortgages in GHB database. Regional indices by province by category of property.Bank of Thailand has recently added indices based on mortgage data from 17 commercial banks in Bangkok and vicinities. Four indices for single detached house with land, townhouse with land, condominium, and land. The first three indices are based on hedonic method controlling for age, floor, developer, and location.Land price index by a mix adjustment method with fixed weights. 

Bank of Thailand. Link

Charles A. Calhoun, “Property Valuation Models and House Price Indexes for the Provinces of Thailand: 1992-2000,” Housing Finance International, 18(3):31-41, March 2003. Link 

United Kingdom

Nationwide Building Society utilizes hedonic regression methods to produce mix-adjusted HPIs for four types of properties (detached houses, semi-detached houses, terraced houses, and flats/apartments), two types of buyers (first-time buyers and former owner/occupiers), and three property ages (new, modern, and old). Link

Halifax Building Society produces indices based on hedonic regression methods utilizing a large number of statistical controls, including location (region), type of property (detached house, semi-detached house, terraced house, bungalow, flats/apartments), age or property, tenure (freehold, leasehold, feudal), number of rooms (habitable rooms, bedrooms, living rooms, bathrooms), number of separate toilets, central heating (none, full, partial), number of garages and garage spaces, garden, land area if greater than one acre, and road charge liability. Link

United States
Federal Housing Finance Agency (FHFA), regulator of Fannie Mae and Freddie Mac, produces repeat sales house price indices using mortgage data received from the regulated companies.Indices published at multiple levels, including national, Census division, state, and metropolitan area, and for state non-metro areas.Additional indices covering all price levels of the market are published based on combined data from Fannie Mae and Freddie Mac, the Federal Housing Administration (FHA), the Veterans Administration (VA), and commercial property data. Link

FHFA HPI Technical Documentation. Charles A. Calhoun, “OFHEO House Price Indexes : HPI Technical Description,” Office of Federal Housing Enterprise Oversight, March 1996. Link

U.S. Department of Commerce publishes the Constant Quality Index (CQI) based on data for new home sold or listed for sale and using hedonic methods. Link

National Association of Realtors (NAR) produces median price series for existing homes for states, metropolitan areas, and postal ZIP Codes using multiple listing service (MLS) data for homes listed for sale. Link

Various commercial HPIs based on repeat sales, including those produced by Case-Shiller S&P, CoreLogic, and Lender Processing Services (LPS). Public versions of the indices are published for major metropolitan areas, with local area indices available for purchase and subscription.

S&P/Case-Shiller Home Price Indices Methodology, November 2009. Link

CoreLogic HPI, News Release, April 2015. Link

Black Knight HPI, May 2015. Link

Len Kiefer, "A Grand Tour of House Price Trends", Feb 2017. Link

 

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