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The System of National Accounts and Alternative Approaches to the Construction of Commercial Property Price Indexes

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  • Diewert, Erwin
  • Shimizu, Chihiro

Abstract

While fluctuations in commercial property prices have an enormous impact on economic systems, the development of related statistics that can capture these fluctuations is one of the areas that is lagging the furthest behind. The reasons for this are that, in comparison to housing, commercial property has a high level of heterogeneity and there are extremely significant data limitations. Focusing on the Tokyo office market, this study estimated commercial property price indexes using the data available in the property market, and clarified discrepancies in commercial property price indexes based on differences in the method used to create them. Specifically, we estimated a quality adjusted price index with the hedonic price method using property appraisal prices and transaction prices. The international System of National Accounts (SNA) requires a decomposition of property values into price and volume (quantity) components for both the structure and land components of property value. The paper shows how this can be accomplished for Commercial properties.

Suggested Citation

  • Diewert, Erwin & Shimizu, Chihiro, 2019. "The System of National Accounts and Alternative Approaches to the Construction of Commercial Property Price Indexes," Microeconomics.ca working papers erwin_diewert-2019-12, Vancouver School of Economics, revised 15 Oct 2019.
  • Handle: RePEc:ubc:pmicro:erwin_diewert-2019-12
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    File URL: https://econ2017.sites.olt.ubc.ca/files/2019/10/pdf_paper_erwin-diewert-19-09SystemofNationalAccountsetc.pdf
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    More about this item

    Keywords

    Commercial property price indexes; System of National Accounts; the builder’s model; transaction based indexes; appraisal prices; assessment prices;

    JEL classification:

    • C2 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables
    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • C43 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Index Numbers and Aggregation
    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • R21 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Housing Demand

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