Housing price statistics - house price index

From Statistics Explained

Data from the first quarter of 2014. Most recent data: Further Eurostat information, Main tables and Database.
Figure 1: House price indices - euro area and EU aggregates; index levels (2010 = 100), 2014Q1 - Source: Eurostat (prc_hpi)
Figure 2: House price indices - euro area and EU aggregates; annual growth rate, 2014Q1 - Source: Eurostat (prc_hpi)
Table 1: House price index - quarterly growth rates, 2014Q1 - Source: Eurostat (prc_hpi)
Figure 3: Weights of Member States in the euro area HPI aggregate, 2013 - Source: Eurostat (prc_hpi)
Figure 4: Deflated house price index euro area and EU aggregates; index levels (2010 = 100) – 2014Q1 - Source: Eurostat (prc_hpi)
Figure 5: Annual deflated HPI - rate of change %, 2013 - Source: Eurostat (prc_hpi)
Table 2: Annual deflated HPI by Member States, rate of change %, 2013 - Source: Eurostat (prc_hpi)
Figure 6: Annual deflated HPI by Member State - rate of change % - EU, 2013 - Source: Eurostat (prc_hpi)
Figure 7: Ratio of house price index to HICP for actual rents - index levels (2010 = 100), 2014Q1 - Source: Eurostat (prc_hpi)

This article describes the house price index (HPI) in the euro area and the European Union (EU), presenting data on this indicator both at European and Member State level. It also provides examples of possible use of this indicator in relation to other statistics, such as consumer price indices, rent price indices and household disposable income. Finally, a summary description of the methodology used in the compilation of the HPI is given.

The HPI shows the price changes of residential properties purchased by households (flats, detached houses, terraced houses, etc.), both newly-built and existing ones, independently of their final use and independently of their previous owners. The Member States’ HPIs are compiled by the national statistical institutes, while Eurostat calculates the euro area and EU HPIs.

Main statistical findings

The index levels (2010 = 100) for the euro area aggregate and EU aggregate house price indices are shown in Figure 1.

The annual growth rate of the euro area and EU HPIs is presented in Figure 2. Looking at the entire period, the annual growth rate of the euro area house price index reached a maximum of 7.3% in the second quarter of 2006, and a minimum in the second quarter of 2009, with -3.6%.

Table 1 presents the quarter on quarter and the annual growth rates for the HPI for the most recent four quarters.

HPIs are computed as Laspeyres-type annual chain indices allowing weights to be changed each year. The European Union HPIs are calculated as weighted averages of the national HPIs, currently using as weights the GDP at market prices (based on PPS) of the countries concerned. The weights used in 2014 are based on data for the preceding year (2013). These weights are illustrated in Figure 3 for the euro area.

Dynamics in the housing market: uses of the house price index and policy implications

The HPIs has been used in conjunction with other macroeconomic statistics to build derived indicators for the analysis of the housing market dynamics.

A well-known example is the deflated (or real) house price index, which is part of the Scoreboard of indicators used in the Macroeconomic Imbalances Procedure (MIP) of the European Commission.

See the dedicated section on Eurostat website and ECFIN web page.

The deflated HPI is the ratio between the nominal HPI and an index of consumer price inflation. A consumer price index, such as the HICP, or a national accounts final consumption deflator can be used for stripping out consumer prices inflation from the HPI. The deflated HPI included in the MIP Scoreboard uses the national accounts final consumption deflator. The deflated HPI growth rate is a key variable for the analysis of house price cycles. In particular, a too high growth rate is considered an early warning indicator of tensions in the real estate market signalling the risk of price bubbles. The alarm threshold adopted in the context of the MIP is 6 % of annual growth rate in the deflated HPI. The level of the threshold was established by DG ECFIN in cooperation with central banks. It was set on the basis of an analysis of historical data on past boom and bust cycles of house prices.

The deflated HPI for the euro area and the EU is presented in Figures 4 (quarterly index) and 5 (annual rate of change). The European aggregates mask significant differences between Member States, as it can be seen in Table 2 - annual deflated HPI. Figure 6 illustrates well the magnitude of the differences among countries in the annual rate of change, for the year 2013.

In order to put house price dynamics into perspective, analysts have developed other indicators that combine the HPI with, for example, the price index of rents, in the form of a price on earnings ratio, or measure affordability using price-to-per capita disposable income of households. Quarterly price to rent index ratios are shown in Figure 7 for the euro area and the EU, using Eurostat data for the HPI and Eurostat HICP for the category actual rents.

Handbook on Residential Property Prices Indices (RPPIs)

The financial and economic crisis has highlighted the importance of correctly measuring the prices of real estate properties. For most citizens, buying a residential property (dwelling) is the most important transaction during their lifetime. The House Price Indices (also named Residential Property Prices Indices - RPPIs) are index numbers measuring the rate at which the prices of residential properties are changing over time. Despite the importance of having official, comparable statistics on RPPIs, a common methodological framework at international level (similar, for example to the SNA for National Accounts or the ILO CPI manual for Consumer Price Statistics) was missing for residential property prices.

Given its position at the forefront of statistical developments in residential property prices since the early 2000's, in 2009 Eurostat launched an ambitious project to develop an International Handbook on RPPIs. The Handbook, released on 3 April 2013 electronically on Eurostat website, provides, for the first time, comprehensive guidelines for the compilation of RPPIs and explains in depth the methods and best practices used to calculate a RPPI. The Handbook primarily addresses official statisticians in charge of producing residential property price indices; at the same time, it addresses the overall requirement on RPPIs by providing a harmonised methodological and practical framework to all parties interested in the compilation of such indices.

The development of the RPPIs Handbook benefitted from the collaboration of Eurostat with the members of the Inter-Secretariat Working Group on Price Statistics, currently chaired by Eurostat: International Labour Organization (ILO), International Monetary Fund (IMF), Organisation for Economic Co-operation and Development (OECD), United Nations Economic Commission for Europe (UNECE) and the World Bank.

The Handbook is available on the dedicated Housing statistics webpage.

Data sources and availability

The house price index (HPI) is based on the legal framework established by Regulation 93/2013 of 1 February 2013 laying down the detailed rules for their compilation. The HPI is compiled on the basis of a harmonised methodology as defined in the Residential Property Price Indices Handbook and on practical implementation guidelines issued by Eurostat. National data are provided by EU national statistical institutes. European aggregates are compiled by Eurostat.

Compilation

The first and most important issue in the compilation of HPIs is the availability of data on dwelling purchases. This refers to information about the price of the transaction and the dwelling characteristics. The dwelling characteristics which most influence price are the type of dwelling (flat, detached house, terraced house, etc.), its size and location. A second issue is the heterogeneity of the housing market, where virtually every dwelling bought and sold is different from the others in some respect. The consequent quality adjustment from one time period to the next is also a major methodological issue in compiling house price indices. The HPI should be seen as an independent price index aimed at measuring price developments for dwellings transacted in the market. The main technical characteristics of the HPI are:

  • the price of land is included in the price and in the weight (gross acquisition concept);
  • only actual transactions of dwellings are covered;
  • market prices for residential properties are covered, while non-market prices are ruled out of the scope of the HPI; meaning that self-built dwellings are excluded, with the possible exception of turnkey pre-fabricated houses;
  • the focus is on the measurement of price developments for all residential properties purchased by households, independently of their final use; so dwellings bought by households for uses other than owner-occupancy are included, for example for investment;
  • all purchases of new and existing dwellings are to be considered, independently of their previous owner; so existing dwellings transacted between households are included.

Prices cover the acquisition cost of a property in itself, and not the total cost that is necessary to acquire, own and maintain a residential property; so other costs related to the acquisition of the property and major repairs are ruled out from its scope.

Additional information on national house price data

Below you can find the available links to the national statistical institutes' websites dealing with housing price statistics. These links contain, in some cases, additional data on housing or methodological notes regarding the compilation of house price indices. Where there is no specific link on housing, a general link to the NSI website is provided.

  • Belgium: data based on Owner-occupied Housing (OOH) pilot study, provided by Statistics Belgium.
  • Czech Republic: data provided by the Czech Statistical Office; some data used for HPI are presented (in Czech language) here; there are some statistics in English (including description and methodology) available through these links: [1] and [2].
  • Germany: data based on OOH pilot study, provided by the Federal Statistical Office; for more information on housing/house price indices, please refer to the homepage of the at Federal Statistical Office under the category of > Zahlen & Fakten > Preise > Bau- und Immobilienpreise > Wohnimmobilien.
Tables on house price indices are available free of charge in the GENESIS-Online data base under 'statistics by theme' at code number 61262.
  • Ireland: Central Statistics Office Ireland (OOH project), Residential Property Price Index (RPPI); data can be accessed at the website of the Central Statistics Office.
  • Greece: data based on OOH pilot study (complemented with estimates) provided by the Hellenic Statistical Authority; link to the website of Hellenic Statistical Authority.
  • Spain: data based on OOH pilot study, provided by INE (complemented with Eurostat estimates for 2005Q1-2005Q3 based on non-harmonised data); the link to the INE website dealing with housing price index: Methodology and results (press release, quarterly series, annual averages indices and weightings) are available therein.
  • Italy: provisional data provided by the Italian National Institute of Statistics; see press release and methodological note in English and Italian version.
  • Lithuania: Statistics Lithuania, House Price indices (HPI); link to Indicators .
  • Luxembourg: data based on OOH pilot study (complemented with estimates) provided by the National Statistical Institute of Luxembourg (STATEC); methodological information available on STATEC’s website for the HPI.
  • Hungary: data based on OOH pilot study (complemented with estimates) provided by the Hungarian Central Statistical Office; a publication on home prices is available on the website of the Hungarian Central Statistical Office; a series of statistical tables are also published.
  • Malta: experimental data provided by the National Statistics Office of Malta; the HPI is an All Property Index that includes terraced houses in addition to apartments and maisonettes.
An article about the developments of Dutch house prices in the context of EU housing evolution was published in March 2013.
  • Austria: data based on OOH pilot study, provided by Statistics Austria(complemented by Eurostat with non-harmonised estimates for the years 2005-2008).
  • Portugal: sources for 2009Q1-onwards, House Price Index (Statistics Portugal), methodology available on the website of Statistics Portugal (in Portuguese only); for 2008, price indexes estimated by Statistics Portugal using bank appraisals data; for the 2005Q1-2007Q4, Eurostat’s estimates based on non-harmonised data.
  • Romania: data based on OOH pilot study, provided by the National Statistical Institute of Romania (complemented by Eurostat with non-harmonised estimates for the years 2005-2008).
The document on which HPI data are published is the 'Prices statistical bulletin'; information and data on dwelling price indices can be found at the Methodological Note and in the table for 'Residential Property Price Indices'.
  • Slovakia: data based on OOH pilot study, provided by the Statistical Office of the Slovak Republic (complemented with Eurostat estimates for the year 2005 based on non-harmonised data); link to the website of the Statistical Office of the Slovak Republic.
  • Sweden: data based on OOH pilot study, provided by Statistics Sweden; presently there is no website on the work on housing and house price indices, but a closely related index to HPI is the Swedish Real Estate Price Index.
  • United Kingdom: source: Office for National Statistics. [3].
  • Iceland: data provided by Statistics Iceland; currently Statistics Iceland doesn't have a special page or metadata for the house price index; an article related to the Icelandic house price index can be found here.
  • Norway: data provided by Statistics Norway. For more information on the Norwegian HPI see here; Statistics Norway also has a Construction and housing theme page.

Context

In recent years, the analysis of housing markets has intensified as has the demand for high quality statistics on national, euro area and EU housing, in particular on residential property price indices. Eurostat and the national statistical institutes have been working together since 2002 on a series of pilot projects to set up a system to provide harmonised data for residential property prices at European level. Prior to this work, there was very little comparability between national data on housing prices within the EU. The development of comparable, timely and frequent statistics on changes in residential property prices has been considered an essential target for European statistics.

In this context, the terms 'residential property price', 'house price' and 'dwelling price' are used interchangeably to describe the price developments of all residential properties purchased by households (flats, detached houses, terraced houses, etc.), both new and existing, independent of their final use and independent of their previous owners. The emphasis is on market prices, with non-market prices being ruled out from the scope of the house price indices (self-build dwellings are therefore excluded. The price of dwellings follows a gross acquisition concept, i.e. it includes the land price component.

See also

Further Eurostat information

Main tables

Database

Publications

Dedicated section

Methodology / Metadata

Other information

External links

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