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Indirect Construction of Hedonic Price Indexes: Empirical Evidence for Private Properties in Switzerland

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  • Stefan S. Fahrlaender

Abstract

This paper analyzes the construction of price indexes for condominiums and single family houses in Switzerland over the period 1985 to 2004 using the indirect method. We find, that the pooling of the data, i.e. direct indexes with fixed hedonic prices, are good models for average roperties but can be biased for the indexation of non-average properties. Therefore indirect index construction using predictions for specific properties based on annual equations are recommended. Based on differentiation of forty regions it is shown, that indexes vary from region to region, but show a comparable general course between 1985 and 2004. In recent years prices for single family houses raised in the large urban areas and tourist resorts but, due to big land reserves, were stable ore even declined in smaller urban and semi-urban as well as in rural areas. Price paths for condominiums are generally comparable to those of single family houses with the big difference, that over the last three years prices were raising in most of the regions.

Suggested Citation

  • Stefan S. Fahrlaender, 2006. "Indirect Construction of Hedonic Price Indexes: Empirical Evidence for Private Properties in Switzerland," Diskussionsschriften dp0601, Universitaet Bern, Departement Volkswirtschaft.
  • Handle: RePEc:ube:dpvwib:dp0601
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    References listed on IDEAS

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    1. Steven C. Bourassa & Eva Cantoni & Martin Hoesli, 2005. "Spatial Dependence, Housing Submarkets, and House Prices," FAME Research Paper Series rp151, International Center for Financial Asset Management and Engineering.
    2. Jonathan Murray & Nicholas Sarantis, 1999. "Price-Quality Relations and Hedonic Price Indexes for Cars in the United Kingdom," International Journal of the Economics of Business, Taylor & Francis Journals, vol. 6(1), pages 5-27.
    3. Stephen Malpezzi, "undated". "Hedonic Pricing Models: A Selective and Applied Review," Wisconsin-Madison CULER working papers 02-05, University of Wisconsin Center for Urban Land Economic Research.
    4. Jon P. Nelson, 2004. "Meta-Analysis of Airport Noise and Hedonic Property Values," Journal of Transport Economics and Policy, University of Bath, vol. 38(1), pages 1-27, January.
    5. Rosen, Sherwin, 1974. "Hedonic Prices and Implicit Markets: Product Differentiation in Pure Competition," Journal of Political Economy, University of Chicago Press, vol. 82(1), pages 34-55, Jan.-Feb..
    6. Stefan Sebastian Fahrländer, 2006. "Semiparametric Construction of Spatial Generalized Hedonic Models for Private Properties," Swiss Journal of Economics and Statistics (SJES), Swiss Society of Economics and Statistics (SSES), vol. 142(IV), pages 501-528, December.
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    More about this item

    Keywords

    Hedonic prices; private property; direct index; indirect index; Switzerland;

    JEL classification:

    • C31 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models; Quantile Regressions; Social Interaction Models
    • 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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