Now-casting house-price indices with list-price data

Current trends in house prices are an important input into decisions on monetary and fiscal policy and macro-prudential supervision. However, long lags in the availability of transaction data imply that current transaction prices are generally unavailable for this purpose. These information lags can be quite long; e.g., in Poland, the current registration lag lies at over 200 days. We show how micro-level list price data can be used to now-cast the current direction of transaction prices in the residential property market and thus fill a vital information vacuum. In particular, we show that to estimate the current direction of the transaction price index, a simple model based on current list price changes outperforms a range of other model specifications based on lagged transaction data. We illustrate our method and results with the help of a detailed list and transaction dataset that covers two large Polish cities (Warsaw and Poznan) for over two decades. The multiple up-and-down movements of the Polish property market during our sample period provide an ideal setting to test the performance of our approach. Our findings imply that list price indices can provide valuable “real-time” market estimations. Employing them in conjunction with official transaction price indices can significantly reduce the information vacuum of policymakers.