The Comparative Analysis of Asking and Traded Price Indices in Different Floor Area Subsegments of the Residential Property Market

Abstract

There are several acknowledged methods for determining residential property price indices. However, all of them have their drawbacks and advantages and reflect the averaged real movements of prices with varying accuracy. The paper attempts to answer the question: How faithfully do indices based on asking prices reflect the movements of traded prices? As a result we will find out whether, in the situation when property price indices cannot be determined, asking price based indices can be used instead. The paper specifies theoretical and practical aspects of constructing residential property price indices on the basis of asking and traded prices. It also contains an empirical analysis of these two index types.