The Hedonic Housing Price Index For Poland Modelling on NBP BaRN Data

The literature abounds with arguments regarding the relevance of reliable measurement of home prices. The correct measurement of home price growth is very important due to decisions taken by various economic agents and the impact of these decisions on the current situation in the domestic economy and its development. The construction of a reliable home price index is a challenging task mainly due to the nature of the housing market and housing itself and availability of relevant data sources concerning this market. The most important issues which have to be addressed by a researcher involved in the measurement of home price trends, are mainly connected with the following two features of a good called housing and the housing market itself: heterogeneous nature of a housing good (there are no two identical housing goods) and rare turnover in housing stock (that is, relatively small number of transactions as compared to the housing stock volume). This paper presents solutions to the abovementioned problems. Especially, the paper shows the construction of the hedonic house price index for Poland and describes in detail the modeling on NBP BaRN data.