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Australian House Prices: A Comparison of Hedonic and Repeat-Sales Measures

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  • JAMES HANSEN

Abstract

House prices are difficult to measure due to changes in the composition of properties sold through time and changes in the quality of housing. I explore whether these issues affect simple measures of house prices, and whether regression-based measures provide an accurate alternative to measuring pure house price changes in Australia. Using unit record data for Australia's three largest cities, regression-based approaches provide a more accurate estimate of pure price changes than a median, and are comparable, with around half of the variation in prices growth explained. These results confirm that regression-based measures are useful for measuring house price changes in Australia. Copyright © 2009 The Economic Society of Australia.

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  • James Hansen, 2009. "Australian House Prices: A Comparison of Hedonic and Repeat-Sales Measures," The Economic Record, The Economic Society of Australia, vol. 85(269), pages 132-145, June.
  • Handle: RePEc:bla:ecorec:v:85:y:2009:i:269:p:132-145
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    Cited by:

    1. David Genesove & James Hansen, 2014. "Predicting Dwelling Prices with Consideration of the Sales Mechanism," RBA Research Discussion Papers rdp2014-09, Reserve Bank of Australia.
    2. Christian Gillitzer & Jin Cong Wang, 2015. "Housing Wealth Effects: Cross-sectional Evidence from New Vehicle Registrations," RBA Research Discussion Papers rdp2015-08, Reserve Bank of Australia.
    3. Alicia Rambaldi & Prasada Rao, 2011. "Hedonic Predicted House Price Indices Using Time-Varying Hedonic Models with Spatial Autocorrelation," Discussion Papers Series 432, School of Economics, University of Queensland, Australia.
    4. Windsor, Callan & La Cava, Gianni & Hansen, James, 2015. "Home price beliefs: Evidence from Australia," Journal of Housing Economics, Elsevier, vol. 29(C), pages 41-58.
    5. Daniel Melser & Adrian D. Lee, 2014. "Estimating the Excess Returns to Housing at a Disaggregated Level: An Application to Sydney 2003–2011," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 42(3), pages 756-790, September.
    6. Katja Hanewald & Michael Sherris, 2011. "House Price Risk Models for Banking and Insurance Applications," Working Papers 201118, ARC Centre of Excellence in Population Ageing Research (CEPAR), Australian School of Business, University of New South Wales.
    7. Costello, Greg & Fraser, Patricia & Groenewold, Nicolaas, 2011. "House prices, non-fundamental components and interstate spillovers: The Australian experience," Journal of Banking & Finance, Elsevier, vol. 35(3), pages 653-669, March.
    8. Alicia N. Rambaldi & Cameron S. Fletcher & Kerry Collins & Ryan R.J. McAllister, 2013. "Housing Shadow Prices in an Inundation-prone Suburb," Urban Studies, Urban Studies Journal Limited, vol. 50(9), pages 1889-1905, July.
    9. Mahmoudi, Parvin & MacDonald, Darla Hatton & Crossman, Neville D. & Summers, David M. & van der Hoek, John, 2013. "Space matters: the importance of amenity in planning metropolitan growth," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 57(1), March.
    10. Ryan Greenaway-McGrevy & Arthur Grimes & Mark Holmes, 2016. "Two countries, sixteen cities, five thousand kilometres: How many housing markets?," ERSA conference papers ersa16p49, European Regional Science Association.
    11. Genesove, David & Hansen, James, 2016. "The Role of Auctions and Negotiation in Housing Prices," CEPR Discussion Papers 11392, C.E.P.R. Discussion Papers.
    12. Arthur Grimes & Mark Holmes, 2010. "New Zealand Housing Markets: Just a Bit-Player in the A-League?," Working Papers 10_07, Motu Economic and Public Policy Research.
    13. Guo, Xiaoyang & Zheng, Siqi & Geltner, David & Liu, Hongyu, 2014. "A new approach for constructing home price indices: The pseudo repeat sales model and its application in China," Journal of Housing Economics, Elsevier, vol. 25(C), pages 20-38.
    14. Matthew Read & Chris Stewart & Gianni La Cava, 2014. "Mortgage-related Financial Difficulties: Evidence from Australian Micro-level Data," RBA Research Discussion Papers rdp2014-13, Reserve Bank of Australia.
    15. Edward Oczkowski, 2016. "Analysing Firm-level Price Effects for Differentiated Products: The Case of Australian Wine Producers," Australian Economic Papers, Wiley Blackwell, vol. 55(1), pages 43-62, March.
    16. Paul Frijters & Benno Torgler & Christian Gillitzer & Jin Cong Wang, 2016. "Housing Wealth Effects: Cross-sectional Evidence from New Vehicle Registrations," The Economic Record, The Economic Society of Australia, vol. 92, pages 30-51, June.
    17. Callan Windsor & Gianni La Cava & James Hansen, 2014. "Home Price Beliefs in Australia," RBA Research Discussion Papers rdp2014-04, Reserve Bank of Australia.
    18. Mick Silver, 2016. "How to Better Measure Hedonic Residential Property Price Indexes," IMF Working Papers 16/213, International Monetary Fund.

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