Commercial Property Price Indexes and the System of National Accounts

Abstract

The paper studies the problems associated with the construction of price indexes for commercial properties that could be used in the System of National Accounts. Property price indexes are required for the stocks of commercial properties in the Balance Sheets of the country. Related service price indexes for the land and structure input components of a commercial property are required in the Production Accounts of the country if the Multifactor Productivity of the Commercial Property Industry is calculated as part of the System of National accounts. The paper reviews existing methods for constructing an overall Commercial Property Price Index (CPPI) and concludes that most methods are biased (due to their neglect of depreciation) and more importantly, not able to provide separate land and structure subindexes. A class of hedonic regression models that is not subject to these problems is discussed.JEL Classification: C2, C23, C43, D12, E31, R21.

Alternative Land‐Price Indexes for Commercial Properties in Tokyo

“…They also need the structure index which in the hedonic regression model to be consistent with the structure price index they use to construct structure capital stocks. Thus the builder's model is particularly suited to national accounts purposes; see Diewert and Shimizu (2015b) [16] and Diewert, Fox and Shimizu (2016) [13]. * 6 This estimate of depreciation is regarded as a net depreciation rate because it is equal to a "true" gross structure depreciation rate less an average renovations appreciation rate.…”

“…We also applied the same least squares methodology to a rolling window 5 term quadratic regression model. Define the 5 dimensional column vectors X 1 and X 2 as before and define 6,12,13,9]; Row 5 = (1/35) [3, −5, −3, 9, 31]. Now repeat the steps that were used to construct the linear smooth P L t L to construct a preliminary quadratic smooth P L t Q , except that the new 5×5 projection matrix X(X T X) −1 X T replaces the previous one.…”

New Estimates for the Price of Housing in the Japanese CPI

“…All households residing in housing rented from private owners in a given rental survey area are then asked their rent and total floor space. 12 There are 54 survey areas distributed throughout the Tokyo ward areas covered in this paper. 13 Rental survey areas are assigned to three groups and surveyed one group at a time on a rotating basis so that a given rental survey area is surveyed every three months.…”

Practice briefing – Automated valuation models (AVMs): their role, their advantages and their limitations

“…Several authors have contributed to investigating the value components of non-residential real estate property, either in general (Boshoff and De Kock, 2013) or with regard to specific uses such as hotels (Wilmath and Engel, 2006) or shopping centres (Rosiers et al, 2016). They have also studied the value of commercial property over time (Diewert et al, 2016). Valuing industrial real estate poses problems similar to those encountered with commercial property.…”