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Housing rent dynamics in Italy

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  • Rondinelli, Concetta
  • Veronese, Giovanni

Abstract

In this paper we focus on tenant rents in Italy and compare results from several methods for the rent dynamic estimation. We first document the sources of data available and then introduce quality adjusted techniques, which enable us to separate the price variation due to qualitative changes in housing attributes from pure price changes. Finally, we compare these measures with unconditional and matched-type price indices derived from microdata. Over the period 1998–2006, we estimate a cumulative rent increase ranging between 40 and 80%. The upper bound refers to the average dynamic for a subset of flats entering the market in a given period. Our hedonic estimates point to an average rent increase of approximately 40%, almost 20 percentage points above the one recorded by the rent component of the Italian consumer price index. A simple calibration model suggests that only part of the difference between our estimates and the official ones is due to survey non-response.

Suggested Citation

  • Rondinelli, Concetta & Veronese, Giovanni, 2011. "Housing rent dynamics in Italy," Economic Modelling, Elsevier, vol. 28(1), pages 540-548.
    • Handle: RePEc:eee:ecmode:v:28:y:2011:i:1:p:540-548
    DOI: 10.1016/j.econmod.2010.06.018
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    1. Hoffmann, Johannes & Kurz, Claudia, 2002. "Rent indices for housing in West Germany 1985 to 1998," Working Paper Series 116, European Central Bank.
    2. Theodore M. Crone & Leonard I. Nakamura & Richard Voith, 2004. "The CPI for rents: a case of understated inflation," Working Papers 04-17, Federal Reserve Bank of Philadelphia.
    3. Ariel Pakes, 2003. "A Reconsideration of Hedonic Price Indexes with an Application to PC's," American Economic Review, American Economic Association, vol. 93(5), pages 1578-1596, December.
    4. Reis, Hugo J. & Santos Silva, J.M.C., 2006. "Hedonic prices indexes for new passenger cars in Portugal (1997-2001)," Economic Modelling, Elsevier, vol. 23(6), pages 890-908, December.
    5. Charles A E Goodhart, 2005. "Beyond current policy frameworks," BIS Working Papers 189, Bank for International Settlements.
    6. Jack Triplett, 2004. "Handbook on Hedonic Indexes and Quality Adjustments in Price Indexes: Special Application to Information Technology Products," OECD Science, Technology and Industry Working Papers 2004/9, OECD Publishing.
    7. Robert J. Gordon & Todd vanGoethem, 2005. "A Century of Housing Shelter Prices: Is There a Downward Bias in the CPI?," NBER Working Papers 11776, National Bureau of Economic Research, Inc.
    8. Salvatore Muzzicato & Roberto Sabbatini & Francesco Zollino, 2008. "Prices of residential property in Italy: constructing a new indicator," Questioni di Economia e Finanza (Occasional Papers) 17, Bank of Italy, Economic Research and International Relations Area.
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    Cited by:

    1. Francesca Modena & Concetta Rondinelli, 2011. "Leaving home and housing prices. The experience of Italian youth emancipation," Department of Economics Working Papers 1101, Department of Economics, University of Trento, Italia.
    2. Greenaway-McGrevy, Ryan & Sorensen, Kade, 2021. "A Time-Varying Hedonic Approach to quantifying the effects of loss aversion on house prices," Economic Modelling, Elsevier, vol. 99(C).
    3. Lee, Hung-Wei & Lin, Che-Chun & Tsai, I-Chun, 2023. "Another application of call options: Explaining the divergence between the housing market and the rental market," Finance Research Letters, Elsevier, vol. 53(C).
    4. Ouyang, Yanyan & Cai, Hongbo & Yu, Xuefei & Li, Zijian, 2022. "Capitalization of social infrastructure into China's urban and rural housing values: Empirical evidence from Bayesian Model Averaging," Economic Modelling, Elsevier, vol. 107(C).
    5. Ofer Raz-Dror, 2019. "The Changes In Rent In Israel During The Years Of The Housing Crisis 2008–2015," Israel Economic Review, Bank of Israel, vol. 17(1), pages 73-116.
    6. Kavonius, Ilja Kristian & Törmälehto, Veli-Matti, 2022. "Is the financial market driving income distribution? – An analysis of the linkage between income and wealth in Europe," Working Paper Series 2707, European Central Bank.
    7. Luca Casolaro & Cristina Fabrizi, 2018. "House prices in local markets in Italy: dynamics, levels and the role of urban agglomerations," Questioni di Economia e Finanza (Occasional Papers) 456, Bank of Italy, Economic Research and International Relations Area.
    8. Cankun Wei & Meichen Fu & Li Wang & Hanbing Yang & Feng Tang & Yuqing Xiong, 2022. "The Research Development of Hedonic Price Model-Based Real Estate Appraisal in the Era of Big Data," Land, MDPI, vol. 11(3), pages 1-30, February.
    9. Hu, Lirong & He, Shenjing & Han, Zixuan & Xiao, He & Su, Shiliang & Weng, Min & Cai, Zhongliang, 2019. "Monitoring housing rental prices based on social media:An integrated approach of machine-learning algorithms and hedonic modeling to inform equitable housing policies," Land Use Policy, Elsevier, vol. 82(C), pages 657-673.
    10. Sofia Vale & Felipa de Mello-Sampayo, 2021. "Effect of Hierarchical Parish System on Portuguese Housing Rents," Sustainability, MDPI, vol. 13(2), pages 1-17, January.
    11. Kai Duttle, 2016. "Cognitive Skills And Confidence: Interrelations With Overestimation, Overplacement And Overprecision," Bulletin of Economic Research, Wiley Blackwell, vol. 68(S1), pages 42-55, December.

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    More about this item

    Keywords

    Hedonic regressions; Matched-models; CPI; Downward bias; Calibration model;
    All these keywords.

    JEL classification:

    • C21 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models
    • C43 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Index Numbers and Aggregation
    • C81 - Mathematical and Quantitative Methods - - Data Collection and Data Estimation Methodology; Computer Programs - - - Methodology for Collecting, Estimating, and Organizing Microeconomic Data; Data Access
    • 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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