A House Price Index measures the price changes of residential housing.
Methodologies commonly used to calculate HPI are the hedonic regression, simple
moving average and repeat-sales regression.
United States = FHFA/OFHEO =
The US Federal Housing Finance Agency publishes the HPI inx, a quarterly broad
measure of the movement of single-family house prices.
The HPI is a weighted, repeat-sales index, meaning that it measures average
price changes in repeat sales or refinancings on the same properties in
363 metropolises. This information is obtained by reviewing repeat mortgage
transactions on single-family properties whose mortgages have been purchased or
securitized by Fannie Mae or Freddie Mac since January 1975.
Since the HPI index only includes houses with mortgages within the conforming
amount limits, the index has a natural cap and does not account for jumbo
mortgages. The HPI was developed in conjunction
with OFHEO's responsibilities as a regulator of Fannie Mae and Freddie Mac.
It is used to measure the adequacy of their capital against the value of their
assets, which are primarily home mortgages.
On July 30, 2008 OFHEO became part of the new Federal Housing Finance Agency.
The index is now termed the FHFA HPI. = S&P/Case-Shiller Indices =
The Case-Shiller index prices are measured monthly and tracks repeat sales
of houses using a modified version of the weighted-repeat sales methodology
proposed by Karl Case and Robert Shiller and Allan Weiss. This means that, to a
large extent, it is able to adjust for the quality of the homes sold, unlike
simple averages. As a monthly tracking index,
Case-Shiller Index has long lag time. Typically, it takes about 2 months for
S&P to publish the results, as opposed to 1 month for most other monthly
indices and indicators. Specific indexes are available for specific metropolitan
areas, and composite indexes for the top 20 and top 10 metro areas, and
nationwide. = FNC Residential Price Index =
FNC Inc. publishes the Residential Price Index, which is based on data collected
from public records blended with data from real-time appraisals of property
and neighborhood attributes. The RPI is the mortgage industry's first hedonic
price index for residential properties. The RPI is constructed to gauge price
movement among non-distressed home sales, and excludes sales of foreclosed
properties. As a monthly tracking index, the RPI has
a lag time of about two months. Specific indices are available for specific
metropolitan areas, and composite indices are available for the top 10,
20, 30, and 100 metro areas. The RPI is also available at the zip code level and
can be constructed to track price trends for specific characteristics since
preferences can change over time. United Kingdom
House Price Indices have been produced in the UK since around 1973, initially
by mortgage-providers, and more recently by government bodies. More recently,
they have come from property market websites. Currently, house prices are
increasing strongly across most parts of the UK, with prices in London showing
the highest growth. UK house prices increased by 10.5% in the year to May
2014, up from 9.9% in the year to April 2014.
= Governmental house price indices = The Office for National Statistics
produces a monthly House Price Index release which publishes figures for
average UK house prices. The index is calculated using mortgage financed
transactions that are collected via the Regulated Mortgage Survey by the Council
of Mortgage Lenders. These cover the majority of mortgage lenders in the UK.
The HPI statistical bulletin provides comprehensive information on the change
in house prices on a monthly and annual basis. It also includes analysis by
region, type of buyer and type of dwelling. To explain how the Office for
National Statistics calculates HPI, they have produced a guidance document called
Official House Price Statistics Explained which details their
methodology and explains the differences between the different sources of
official house price statistics. The Land Registry House Price Index is
calculated on behalf of HM Land Registry by Calnea Analytics. It uses the Land
Registry’s own data, which consists of the transaction records of all
residential property sales in England and Wales. It uses Repeat Sales
Regression. The number of monthly transactions is approximately 100,000
per month. The index excludes sales from repossessions and auctions as these "do
not represent full market price". The DCLG House Price Index [1] for the
Department of Communities and Local Government uses the mix-adjusted method,
which is based on weighted averages. The data used in this HPI is mortgage
completion data supplied by a few large lenders.
A House Price Index used to be produced by the Department for the Environment.
= Private sector house price indices = The Nationwide House Price Index and
Halifax House Price Index use Hedonic regression using their own datasets
compiled from their mortgage lending. These indices have a longer time-series
than the Governmental HPIs. = Current UK indices =
Ireland In the Republic of Ireland, Permanent
TSB and the Economic and Social Research Institute have published a monthly
houseprice index since January 1996. India
In India, National Housing Bank completely owned by Reserve Bank of
India computes an index termed NHB RESIDEX. The index was formulated based
on a pilot study covering 5 cities, Delhi, Mumbai, Kolkata, Bangalore and
Bhopal representing the five regions of the country. Actual transactions prices
are used to compute an Index reflecting the market trends. 2007 is taken as the
base year for the study to be comparable with the WPI and CPI. It now covers
Delhi with NCR, Bangalore, Mumbai, Kolkata, Bhopal, Hyderabad, Faridabad,
Patna, Ahmedabad, Chennai, Jaipur, Lucknow, Pune, Surat, Kochi,
Bhubaneshwar, Guwahati, Ludhiana, Vijayawada, Indore, Chandigarh,
Coimbatore, Dehradun, Meerut, Nagpur and Raipur. The index shows that the prices
have doubled in cities like Mumbai, Delhi and Bhopal, but have declined in
Hyderabad and Kochi. Canada
In Canada, the New Housing Price Index is calculated monthly by Statistics
Canada. Additionally, a resale house price index is also maintained by the
Canadian Real Estate Association, based on reported sale prices submitted by
real estate agents, and averaged by region. In December 2008, the private
National Bank and the information technology firm Teranet began a separate
monthly house price index based on resale prices of individual
single-family houses in selected metropolitan areas, using a methodology
similar to the Case-Shiller index and based on actual sale prices taken from
government land registry databases. This allows Teranet and the National Bank to
track prices without allowing periods of high sales in one city to push up the
national average. The National Bank also operates a forward market on Canadian
housing prices. See also
Real estate appraisal Resources
Downie, M. L. & Robson G. Automated Valuation Models: an international
perspective. Pp 11 Council of Mortgage Lenders, London, ISBN 1-905257-12-0.
Lim, S. & Pavlou M. An improved national house price index using Land Registry
data RICS research paper series: Volume 7 Number 11. Pp 10–14. London, ISBN
978-1-84219-347-1. Accessed 21 November 2007.
How is the HPI calculated? Accessed 9 May 2014
References