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Comparing alternative house price indices: evidence from asking prices in Malta

Author

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  • Joseph Falzon
  • David Lanzon

Abstract

Purpose - The paper aims to describe, construct, and compare alternative price indices for real estate in Malta over the period 1980‐2010. Design/methodology/approach - The paper utilises the technique of hedonic regression analysis to construct four hedonic price indices. One of the constructed indices is based the unconstrained hedonic methodology. Two other indices are variants of the constrained hedonic technique, while the fourth consists of an imputed hedonic index. The hedonic indices are then compared to other 12 conventional indices, namely the Laspeyres, Paasche and Fisher indices (constant weight and chain linked) that are constructed by utilizing the mean and median house prices pertaining to 14 different types of houses. Findings - All indices are found to move closely together, growing between six and seven times between 1980 and 2010. The average annual compound growth rate of the 16 indices was found to be 6.5126 percent. The paper also shows how the estimated hedonic coefficients can be used to construct regional price indices for different combinations of housing characteristics. Originality/value - The paper builds on previous work related to house prices in Malta. Its main contribution is the construction of hedonic indices that are based on advertised prices that span over a relatively long period of 31 years, together with the construction of constant weight and chain linked Laspeyres, Paasche and Fisher indices.

Suggested Citation

  • Joseph Falzon & David Lanzon, 2013. "Comparing alternative house price indices: evidence from asking prices in Malta," International Journal of Housing Markets and Analysis, Emerald Group Publishing Limited, vol. 6(1), pages 98-135, March.
    • Handle: RePEc:eme:ijhmap:v:6:y:2013:i:1:p:98-135
    DOI: 10.1108/17538271311306048
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    Citations

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    Cited by:

    1. Reuben Ellul & Jude Darmanin & Ian Borg, 2019. "Hedonic house price indices for Malta: A mortgage-based approach," CBM Working Papers WP/02/2019, Central Bank of Malta.
    2. Ian Borg & Jude Darmanin & Reuben Ellul, 2019. "Hedonic house price indices for Malta: A mortgage-based approach," CBM Working Papers WP/04/2019, Central Bank of Malta.
    3. Nicoletta Pashourtidou & Sofia N. Andreou, 2020. "Residential property price indices using asking prices: the case of Cyprus," Cyprus Economic Policy Review, University of Cyprus, Economics Research Centre, vol. 14(2), pages 1-30, December.

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