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A house price index based on the SPAR method

  • de Vries, Paul
  • de Haan, Jan
  • van der Wal, Erna
  • Mariën, Gust
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    Within the European Union there has been a push to provide European governments and the European Central Bank with the statistics they need for monitoring the owner-occupied sector. This paper reports on the results of a project to develop a house price index for the Netherlands. From January 2008, Kadaster, the Dutch land registry office, and Statistics Netherlands began jointly publishing house price index numbers for the whole country and for some specific dwelling types and regions. A number of special institutional features of the situation in the Netherlands contributed to the choice of index construction method. The indexes are computed using the Sale Price Appraisal Ratio (SPAR) method, which utilizes the ratios of transaction prices and previous appraisal values. We describe the SPAR method, compare it with repeat sales methods and assess the reliability of the official Dutch appraisal values. Empirical results for January 1995-March 2009 are presented. The SPAR method performs well compared to repeat sales, and the results reported will be of interest to other countries that have, or could instigate, institutional arrangements similar to those in the Netherlands.

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    File URL: http://www.sciencedirect.com/science/article/B6WJR-4WTHS5S-1/2/22d49d71a034beb741d9095795b10c13
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    Article provided by Elsevier in its journal Journal of Housing Economics.

    Volume (Year): 18 (2009)
    Issue (Month): 3 (September)
    Pages: 214-223

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    Handle: RePEc:eee:jhouse:v:18:y:2009:i:3:p:214-223
    Contact details of provider: Web page: http://www.elsevier.com/locate/inca/622881

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    1. Steele, Marion & Goy, Richard, 1997. "Short Holds, the Distributions of First and Second Sales, and Bias in the Repeat-Sales Price Index," The Journal of Real Estate Finance and Economics, Springer, vol. 14(1-2), pages 133-54, Jan.-Marc.
    2. Clapp, John, 1998. "Revisions in Repeat Sales Price Indices: Here Today, Gone Tomorrow?," ERES eres1998_128, European Real Estate Society (ERES).
    3. Robert J. Shiller, 1991. "Arithmetic Repeat Sales Price Estimators," Cowles Foundation Discussion Papers 971, Cowles Foundation for Research in Economics, Yale University.
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    5. Robert J. Hill & Daniel Melser, 2008. "Hedonic Imputation And The Price Index Problem: An Application To Housing," Economic Inquiry, Western Economic Association International, vol. 46(4), pages 593-609, October.
    6. Jesse M. Abraham & William S. Schauman, 1991. "New Evidence on Home Prices from Freddie Mac Repeat Sales," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 19(3), pages 333-352.
    7. S. Jansen & P. Vries & H. Coolen & C. Lamain & P. Boelhouwer, 2008. "Developing a House Price Index for The Netherlands: A Practical Application of Weighted Repeat Sales," The Journal of Real Estate Finance and Economics, Springer, vol. 37(2), pages 163-186, August.
    8. Baroni, Michel & Barthélémy, Fabrice & Mokrane, Mahdi, 2004. "Physical Real Estate. A Paris Repeat Sales Residential Index," ERES eres2004_105, European Real Estate Society (ERES).
    9. Michelle H. Dreiman & Anthony Pennington-Cross, 2004. "Alternative Methods of Increasing the Precision of Weighted Repeat Sales House Prices Indices," The Journal of Real Estate Finance and Economics, Springer, vol. 28(4), pages 299-317, 05.
    10. Englund, Peter & Quigley, John M. & Redfearn, Christian L., 1998. "Improved Price Indexes for Real Estate: Measuring the Course of Swedish Housing Prices," Journal of Urban Economics, Elsevier, vol. 44(2), pages 171-196, September.
    11. Steven C. Bourassa & Martin Hoesli & Jian Sun, 2004. "A Simple Alternative House Price Index Method," FAME Research Paper Series rp119, International Center for Financial Asset Management and Engineering.
    12. Geltner, David Michael, 1991. "Smoothing in Appraisal-Based Returns," The Journal of Real Estate Finance and Economics, Springer, vol. 4(3), pages 327-45, September.
    13. Karl E. Case & Robert J. Shiller, 1987. "Prices of Single Family Homes Since 1970: New Indexes for Four Cities," NBER Working Papers 2393, National Bureau of Economic Research, Inc.
    14. Robert Edelstein & Daniel Quan, 2006. "How Does Appraisal Smoothing Bias Real Estate Returns Measurement?," The Journal of Real Estate Finance and Economics, Springer, vol. 32(1), pages 41-60, February.
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