Constructing a national house price index for Ireland

Abstract

The Central Statistics Office will publish the first results of its national House Price Index on May 13th 2011. This hedonic index is constructed using data on mortgage drawdowns by eight lending institutions under Section 13 of the Housing Act (2002). This paper describes how the development of the index has been largely driven by an impending European legislative requirement to produce indices of the costs of Owner Occupied Housing in the context of the Harmonised Index of Consumer Prices. It discusses the limitations of data on Irish residential property transactions in the context of the national House Price Index and the proposed register of property transactions. Practical considerations covering the treatment of data, the design of the hedonic functions, the rolling year regression model employed and the weighting of sub indices to form a composite national index are described. The index results are examined in the context of some of the other measures of house prices in Ireland. Finally, the paper explores some future challenges for further development of the measurement of residential property prices in Ireland.