The drafting of a new dwellings index

As part of a European project (the Owner-Occupied Housing project - OOH), works were carried out in the 2000s to draft a House Price Index (HPI). This index has two components: one for existing dwellings and the other for new dwellings. In France, an index already covered the former ones (the Notaires-Insee index of prices of existing dwellings) while there was no index for the latter. Thus, INSEE had to create an index of the evolution of new housing prices. The works carried out within the Consumer Prices Division led to the publication of an index for new dwellings in January 2013 covering the period 2006Q1-2012Q3, in accordance with European directives.

A hedonic model was first developped, using data from the survey on the commercialisation of new dwellings (in French Enquête sur la commercialisation des logements neufs, ECLN) conducted by the Observation and Statistics Service (SOeS) of the Ministry of Ecology, Sustainable Development, Transport and Housing. A price index purged of quality effects is then obtained by using the so-called adjacent period method: the model is enriched with a time dummy and then estimated quarterly using ECLN data from the last two quarters.

After noting differences in the evolution between the new homes index and the Notaires-Insee index of existing homes’ prices over the period 2006Q1-2012Q3, two additional methodological studies were carried out. These works allowed us to ensure that these divergences did not correspond to a method bias (1st study) and did not result from not taking geography well enough into account in the adjacent period model (2nd study). Indeed the vast majority of the divergences are due to the difference in the nature of the dwellings themselves.

Following the first release of the new dwellings index in January 2013, the analyses were continued to try to improve the quality of the hedonic model. This led us to slightly revise its specification, and to use five rolling quarters instead of two. The renewed new dwellings index thus obtained was published from the first quarter of 2017 onwards.