New estimates for the price of housing in the Japanese CPI

Abstract

Throughout their histories most advanced nations have experienced abrupt increases and subsequent decreases in asset prices, especially housing prices. These fluctuations have had substantial impact on the financial system, often leading to a stagnation of economic activity. The most representative examples are Japan and Sweden in the 1990s and, more recently, the global financial crisis triggered by the sub-prime problem in the United States. Reinhart and Rogoff (2008) conducted an exhaustive, long-term, comparative time series analysis of economic data from numerous countries which made it clear that the incidence of various economic phenomena is a common factor underlying banking crises. It has been noted that one of these phenomena is a significant increase in asset prices, and property prices in particular, compared to rents.