Abstract
Abstract Property price indexes are difficult to determine both from the substantive and technical/organizational points of view. Various methods of constructing such indexes have been developed in order to overcome these difficulties. To this end, the author compares two types of indexes: hedonic indexes and ones termed filtered for the purpose of this particular paper. Hedonic index values come from Polish National Bank (NBP) publications, while the filtered indexes have been computed with the use of the 4253H filter on the basis of the NBP announcements on mean property prices. Thus, the results are comparable as both types of indexes are derived from the same input databases. The analysis covers both the comparison of the obtained results as well as a discussion of substantive and technical problems encountered when building the property price indexes.
Highlights
It took almost two decades of market economy in Poland before the Polish real estate market understood the need for property price indices and learned how to determine them
Due to this unique nature, property price indices cannot be constructed by means of methods applied for creating price indices of other marketed goods (Wood 2005), because real estate prices are observed in a nonstandard way (KOKOT 2015b)
What seems noteworthy is the comparison of the standard deviation of hedonic and filtered indices. The former are always bigger, occasionally several times bigger. It seems that if we relied solely on hedonic indexes, we would come to a conclusion that property prices change more often and more dramatically than if we based our computations on filtered indices
Summary
It took almost two decades of market economy in Poland before the Polish real estate market understood the need for property price indices and learned how to determine them. The reports are supplemented with a database of residential property prices, including mean unit prices in selected cities and in groups of cities, as well as determined prices of a square meter. This database has been completed with information going back to 2006. The substantive problems are associated with the specific character of the real estate market as well as of the marketed properties themselves (see, e.g.: Wycena nieruchomości 2006). The quality of the data often leaves a lot to be desired (Konowalczuk 2014, Kokot 2015a)
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