A house price index defined in the potential outcomes framework

Nicholas Longford

Economics Working Papers from Department of Economics and Business, Universitat Pompeu Fabra

Abstract: Current methods for constructing house price indices are based on comparisons of sale prices of residential properties sold two or more times and on regression of the sale prices on the attributes of the properties and of their locations. The two methods have well recognised deficiencies, selection bias and model assumptions, respectively. We introduce a new method based on propensity score matching. The average house prices for two periods are compared by selecting pairs of properties, one sold in each period, that are as similar on a set of available attributes (covariates) as is feasible to arrange. The uncertainty associated with such matching is addressed by multiple imputation, framing the problem as involving missing values. The method is applied to aregister of transactions ofresidential properties in New Zealand and compared with the established alternatives.

Keywords: Hedonic regression; house prices; matching; potential outcomes; propensity scoring; repeat-sales method (search for similar items in EconPapers)
JEL-codes: C1 C13 C15 C3 C31 E3 E31 (search for similar items in EconPapers)
Date: 2009-10
New Economics Papers: this item is included in nep-ecm, nep-res and nep-ure
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Citations: View citations in EconPapers (3)

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Persistent link: https://EconPapers.repec.org/RePEc:upf:upfgen:1175

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