Controlling for transactions bias in regional house price indices

Mason, P. and Pryce, G. (2011) Controlling for transactions bias in regional house price indices. Housing Studies, 26(5), pp. 639-660. (doi:10.1080/02673037.2011.581908)

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Abstract

Transactions bias arises when properties that trade are not a random sample of the total housing stock. Price indices are susceptible because they are typically based on transactions data. Existing approaches to this problem rely on Heckman-type correction methods, where a probit regression is used to capture the differences between properties that sell and those that do not sell in a given period. However, this approach can only be applied where there is reliable data on the whole housing stock. In many countries—the UK included—no such data exist and there is little prospect of correcting for transactions bias in any of the regularly updated mainstream house price indices. Thispaper suggests a possible alternative approach, using information at postcode sector level and Fractional Probit Regression to correct for transactions bias in hedonic price indices based on one and a half million house sales from 1996 to 2004, distributed across 1200 postcode sectors in the South East of England.

Item Type:Articles
Additional Information:This is an Author's Accepted Manuscript of an article published in Mason, P., and Pryce, G. (2011) Controlling for transactions bias in regional house price indices. Housing Studies, 26 (5). pp. 639-660. Copyright Taylor and Francis, available online at: http://www.tandfonline.com/10.1080/02673037.2011.581908
Status:Published
Refereed:Yes
Glasgow Author(s) Enlighten ID:Mason, Dr Philip and Pryce, Professor Gwilym
Authors: Mason, P., and Pryce, G.
College/School:College of Social Sciences > School of Social and Political Sciences > Urban Studies
Journal Name:Housing Studies
Publisher:Taylor & Francis
ISSN:0267-3037
ISSN (Online):1466-1810
Published Online:06 July 2011
Copyright Holders:Copyright © 2011 Taylor and Francis
First Published:First published in Housing Studies 26(5):639-660
Publisher Policy:Reproduced in accordance with the copyright policy of the publisher

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