Comparing alternative house price indices: evidence from asking prices in Malta
International Journal of Housing Markets and Analysis
ISSN: 1753-8270
Article publication date: 1 March 2013
Abstract
Purpose
The paper aims to describe, construct, and compare alternative price indices for real estate in Malta over the period 1980‐2010.
Design/methodology/approach
The paper utilises the technique of hedonic regression analysis to construct four hedonic price indices. One of the constructed indices is based the unconstrained hedonic methodology. Two other indices are variants of the constrained hedonic technique, while the fourth consists of an imputed hedonic index. The hedonic indices are then compared to other 12 conventional indices, namely the Laspeyres, Paasche and Fisher indices (constant weight and chain linked) that are constructed by utilizing the mean and median house prices pertaining to 14 different types of houses.
Findings
All indices are found to move closely together, growing between six and seven times between 1980 and 2010. The average annual compound growth rate of the 16 indices was found to be 6.5126 percent. The paper also shows how the estimated hedonic coefficients can be used to construct regional price indices for different combinations of housing characteristics.
Originality/value
The paper builds on previous work related to house prices in Malta. Its main contribution is the construction of hedonic indices that are based on advertised prices that span over a relatively long period of 31 years, together with the construction of constant weight and chain linked Laspeyres, Paasche and Fisher indices.
Keywords
Citation
Falzon, J. and Lanzon, D. (2013), "Comparing alternative house price indices: evidence from asking prices in Malta", International Journal of Housing Markets and Analysis, Vol. 6 No. 1, pp. 98-135. https://doi.org/10.1108/17538271311306048
Publisher
:Emerald Group Publishing Limited
Copyright © 2013, Emerald Group Publishing Limited