The Importance of Real Estate Price Indices in Financial Crisis and the Approaches for Constructing Them

Journal of Capital Markets, Financial Engineering and Risk Management Special Issue, April 2012

19 Pages Posted: 17 Apr 2012

See all articles by Ali Hepsen

Ali Hepsen

Istanbul University - Faculty of Business Administration, Department of Finance

Date Written: April 16, 2012

Abstract

Pricing the real estate property and pre-determining increasing and decreasing movements in prices by establishing the real estate price index in the country have an important place in order to provide price stability in national economies and predict formation of financial crisis. In this context, when world-wide examples are considered, the unit method (and stratified real estate price index), the repeat sales methodology and the hedonic regression approach are used in preparation of the real estate price indices, and compiling price-related data is important as well as selecting the method to be used in indices. Academic studies focusing on the real estate price indices have revealed that deed data, data of real estate appraisal companies, price data obtained from the real estate project producers and announcements related to the real estates, put on the market, are used in compiling the prices. Along with comprehensive literature research, the most important purpose of the related study is to address the methods used to establish the real estate price indexes and to emphasize their importance for financial markets.

Note: Downloadable document is in Turkish.

Keywords: Financial Crisis, Real Estate Price Index, the Unit Method, the Stratified Real Estate Price Index Method, the Repeat Sales Method, the Hedonic Regression Method

JEL Classification: F30, G10, R10, R20

Suggested Citation

Hepsen, Ali, The Importance of Real Estate Price Indices in Financial Crisis and the Approaches for Constructing Them (April 16, 2012). Journal of Capital Markets, Financial Engineering and Risk Management Special Issue, April 2012, Available at SSRN: https://ssrn.com/abstract=2040707

Ali Hepsen (Contact Author)

Istanbul University - Faculty of Business Administration, Department of Finance ( email )

Istanbul
Turkey

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