Australian House Prices: A Comparison of Hedonic and Repeat-Sales Measures

Abstract

House prices are difficult to measure due to changes in the composition of properties sold through time and changes in the quality of housing. I explore whether these issues affect simple measures of house prices, and whether regression-based measures provide an accurate alternative to measuring pure house price changes in Australia. Using unit record data for Australia's three largest cities, regression-based approaches provide a more accurate estimate of pure price changes than a median, and are comparable, with around half of the variation in prices growth explained. These results confirm that regression-based measures are useful for measuring house price changes in Australia. © 2009 Econ..