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New or old, why would housing price indices differ? An analysis for France

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  • Thomas Balcone
  • Anne Laferrère

Abstract

[eng] In France, housing price indices have been computed since 1996 for second-hand dwellings (Indices Notaires-Insee) and since 2013 for new dwellings (Indice des prix des logements neufs). The evolution and volatility of the two indices differ. We explore why using notarial data and surveys on new home sales (ECLN) and the price of building land (EPTB). The computation methods and the scopes of the indices contribute relatively little to the differences. The location of new and old housing differs, but this still explains only part of the differences. Decomposing a home value between that of land and that of buildings reveals that the share of land is higher for second-hand than for new dwellings. Land and second-hand dwellings price indices evolve in a very similar way. Structures prices have a greater influence on the price index of new housing prices. Nevertheless, construction costs are sensitive to the trend in land prices. The countercyclical construction of social housing may have contributed to reduce the volatility of new housing prices.

Suggested Citation

  • Thomas Balcone & Anne Laferrère, 2018. "New or old, why would housing price indices differ? An analysis for France," Economie et Statistique / Economics and Statistics, Institut National de la Statistique et des Etudes Economiques (INSEE), issue 500-501-5, pages 69-95.
    • Handle: RePEc:nse:ecosta:ecostat_2018_500-501-502_5
    DOI: https://doi.org/10.24187/ecostat.2018.500t.1946
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    1. Jeremy C. Stein, 1995. "Prices and Trading Volume in the Housing Market: A Model with Down-Payment Effects," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 110(2), pages 379-406.
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    More about this item

    JEL classification:

    • 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
    • R31 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Housing Supply and Markets

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