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A Simple Alternative House Price Index Method

Author

Listed:
  • Steven C. Bourassa

    (School of Urban and Public Affairs, University of Louisville)

  • Martin Hoesli

    (HEC, University of Geneva, FAME and University of Aberdeen)

  • Jian Sun

    (School of Urban and Public Affairs, University of Louisville)

Abstract

This paper presents the Sale Price Appraisal Ratio (SPAR) method for constructing house price indexes. The method, which uses ratios of transaction prices and previous appraised values to build up an index, has been applied since the early 1960s to produce semi-annual price indexes for regions and cities in New Zealand. We compare the official New Zealand indexes for three urban areas with repeat sales and hedonic indexes created from the same transactions data, and observe that the SPAR method produces an index very much like those produced by hedonic methods. Given the number of advantages and few disadvantages that we find for the SPAR method relative to the more traditional methods, we maintain that it should be considered by government agencies elsewhere when developing house price indexes.

Suggested Citation

  • 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.
    • Handle: RePEc:fam:rpseri:rp119
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    File URL: http://www.swissfinanceinstitute.ch/rp59.pdf
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    Keywords

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    JEL classification:

    • 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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