Reports of Study Groups, etc. No.05

Estimation system of the apartment price index
-"Research on the Real Estate Price Index" in fiscal 2001-

May 16, 2002
Economic and Social Research Institute
1.Outline
 
   The Japan Research Institute Foundation was commissioned "Research on the Real Estate Price Index" by the Economic and Social Research Institute in fiscal 2001. In this research, we developed a system that adjusted quality (size, age, location, etc.) to the contract price of apartments and estimated the monthly price index to create a real estate price index that reflected current market prices.
   This research is based on the result of "Investigation on the Real Estate Price Index" which the Research Bureau of the erstwhile Economic Planning Agency carried out as contract research to the Japan Research Institute Foundation after fiscal 1999.
 
2. Features of the apartment price index (hereafter called "the index") and the estimation system1
 
(1)   Since the attributes of the apartments such as age, conditions of location, floor area, and others are various, we estimate an adjusted index using an econometric technique (the hedonic approach2).
(2)   The estimation system of the index can be operated on a personal computer.
(3)   We obtained the monthly data contract prices of apartments through cooperation with the Real Estate Information Network for East Japan Foundation, and used it for estimation as original data. It thereby became possible to estimate the aggregate metropolitan index and its regional breakdown (Saitama, Chiba, Tokyo and Kanagawa).
 
3. Miscellaneous
 
   To broadly obtain comments on our research results and to use those comments for future research, we publish the estimated equation, coefficient list, and other factors on the Economic and Social Research Institute homepage. We have made the estimation system available for free under certain conditions.3.
 
1   We investigated by establishing "a special committee about the real estate price index" (chairman, professor Makoto Ota, Tsukuba University) which made the Japan Research Institute Foundation a secretariat in the estimation of the index and development of an estimation system (a specialist participated also from the Real Estate Information Network for East Japan Foundation).
2   The "Hedonic approach" is a technique that is considered that the prices of goods can be explained by function and character of goods. The empirical study on prices of cars, personal computers, land prices, and so on, has been conducted.
3   For example, "the estimation system and the estimation result must not be used for profit purposes".



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