 A new framework to disentangle the impact of changes in dwelling characteristics on house price indicesPeter Reusens, Frank Vastmans and Sven Damen Economic Modelling, 2023, vol. 123, issue C Abstract: While house price indices aim to measure the change in price of an identical dwelling over time, many are unable to sufficiently control for changes in the quality of the houses sold. This change in quality is a known, but rarely measured, factor. Our paper proposes a new framework to disentangle and quantify the contribution of each individual dwelling characteristic to the quality change. It can be applied to many frequently used hedonic house price indices and allows for non-linear, time-varying price premia for the various dwelling characteristics. Using data from Belgium for 2011 Q3 - 2021 Q2, we found that the quality of the houses sold increased substantially, mostly due to improvements in energy efficiency. As energy performance will continue to improve to meet European climate goals, statistical agencies should incorporate it into the construction of their house price indices in order to avoid overestimating price growth. Keywords: House price index; Hedonic regression; Quality adjustment; Housing market; Energy efficiency (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:ecmode:v:123:y:2023:i:c:s0264999323000640 DOI: 10.1016/j.econmod.2023.106252 Access Statistics for this article Economic Modelling is currently edited by S. Hall and P. Pauly More articles in Economic Modelling from Elsevier |
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