Property Markets’ Maturities And The Developments Of House Price Indices: A Review On Literature

With regard to a number of real estate literature on maturity of global property markets as pegged to, among other things, market transparency, there seems to be a less definitive or cutting-across picture portraying such transparency in the light of aiding the developments in property price indices in markets of differing levels of maturity. It seems bewildering that much of the literature is either based on developed European and US markets or a comparison between those two and Asian markets and little concern has been on infant markets.The aim of this review paper was not to give account on developments in property price indices in infant markets but rather to generate a collectively comparative picture of the development of such indices with regard to three most regarded levels of market maturities i.e. developed, emerging and infant markets. The paper looks at data availability in different market levels and the adopted methods in developing house price indices. A number of available literature were reviewed at different market levels. In general, a vast of literature suggests that transaction based models in house price indices are more prevalent in highly matured markets and less prevalent in emerging markets such as some parts of Asia. Little literature is available on the adoption of transaction based models in infant sub-Saharan markets. The literature further collectively suggests that the more vibrant the market is, in terms of property transactions, the more preference will be on transaction based models as opposed to valuation/appraisal based models. Also collectively, the literature suggests that valuation based models would more easily fit the infant markets given infrequent trading of housing units. Recommendations out of this review are two-fold: modification of valuation based models to effectively mimic transactions or data innovative techniques to favour the adoption of transaction based models.