Estimating regional house price levels
Methodology and results of a pilot project with Spain
While indices tracing the evolutions of regional house prices are increasingly available,
this is less the case for similar data on house price levels. And where data on house
price levels exist, they are not necessarily consistent with the patterns observed
from house price indices. Yet, consistent regional statistics on house price levels
are fundamental to assess housing affordability, potential barriers to labour mobility
across regions, and for the design of housing policies. This article puts forward
a method to compile regional house price levels that are consistent with the evolutions
given by quality-adjusted house price indices, representative of the underlying stock
of dwellings, and based on the information on house price levels that is available
at all dates rather than in a single reference year. This method could be scaled up
to different countries. The results obtained with Spanish data show that the decline
in house prices following the global financial crisis of 2008-09 initially reduced
the dispersion in house prices across Spanish regions, but this dispersion has increased
again afterwards, and since 2016, it exceeds the one recorded in 2008. A comparison
of price-per-m² to regional-income ratios shows that the relative housing affordability
in the region of Madrid deteriorated compared to all other Spanish regions in the
last decade. Monitoring whether shifts in housing demand following the COVID-19 pandemic
will reverse this trend will be key.
Published on December 08, 2021
In series:OECD Statistics Working Papersview more titles