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Aggregation Bias on Residential Property Price Indexes: Hedonic Measurement vs. Repeat Sales Measurement

Author

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  • Shimizu, Chihiro
  • Karato, Koji

Abstract

Property has the particularity of being a non-homogeneous good, and based on this, it is necessary to perform quality adjustment when estimating property price indexes. Various methods of quality adjustment have been proposed and applied, such as the hedonic method often used in price statistics and, due to the fact that the information that can be used in estimation is limited, the repeat sales price method, methods using property appraisal price information, and so forth. However, since there is a lack of theoretical knowledge and data restrictions, it is no exaggeration to say that it is difficult to evaluate their practical application in the present situation. We summarized theoretical background of property price indexes and used a unique dataset that we had compiled from individual listings in a widely circulated real estate advertisement magazine.

Suggested Citation

  • Shimizu, Chihiro & Karato, Koji, 2015. "Aggregation Bias on Residential Property Price Indexes: Hedonic Measurement vs. Repeat Sales Measurement," Economic Review, Hitotsubashi University, vol. 66(3), pages 209-223, July.
    • Handle: RePEc:hit:ecorev:v:66:y:2015:i:3:p:209-223
    DOI: 10.15057/27517
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    More about this item

    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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