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Abstract

Vol. 66, No. 3, pp. 209-223 (2015)

“Aggregation Bias on Residential Property Price Indexes: Hedonic Measurement vs. Repeat Sales Measurement”
Chihiro Shimizu (National University of Singapore & Massachusetts Institute of Technology), Koji Karato (Fuclty of Economics, University of Toyama)

Property has the particularity of being a non-homogeneous good, and based on this, it is necessary to perform quality adjustment when estimating property price indexes. Various methods of quality adjustment have been proposed and applied, such as the hedonic method often used in price statistics and, due to the fact that the information that can be used in estimation is limited, the repeat sales price method, methods using property appraisal price information, and so forth. However, since there is a lack of theoretical knowledge and data restrictions, it is no exaggeration to say that it is difficult to evaluate their practical application in the present situation. We summarized theoretical background of property price indexes and used a unique dataset that we had compiled from individual listings in a widely circulated real estate advertisement magazine.