Breakdown of the owner-occupied housing price index
The OOH price index shall cover the following expenditure categories:
(a)
O.1. Owner-occupiers’ housing expenditure;
(b)
O.1.1. Acquisitions of dwellings;
(c)
O.1.1.1. New dwellings;
(d)
O.1.1.1.1. Purchases of newly built dwellings;
(e)
O.1.1.1.2. Self-build dwellings and major renovations;
(f)
O.1.1.2. Existing dwellings new to households;
(g)
O.1.1.3. Other services related to the acquisition of dwellings;
(h)
O.1.2. Ownership of dwellings;
(i)
O.1.2.1. Major repairs and maintenance;
(j)
O.1.2.2. Insurance connected with dwellings;
(k)
O.1.2.3. Other services related to ownership of dwellings.
Owner-occupied housing price index compilation
The OOH price index shall be based on the ‘net acquisitions’ approach, which measures changes in prices paid by households for the acquisition of dwellings that are new to the household sector and changes in other costs related to the ownership, and transfer of ownership, of dwellings.
Weights reflecting the structure of owner-occupiers’ housing expenditure
1. Each year, Member States shall compile and transmit to the Commission (Eurostat) one set of weights for OOH price indices, in accordance with the expenditure categories referred to in Article 11.
2. Member States shall derive the sub-index and elementary aggregate weights reflecting the structure of owner-occupiers’ housing expenditure, as defined in the Annex, used in the index for year t as follows:
(a)
national accounts data for year t-2 combined with any available and relevant information from other data sources shall be used to obtain sub-index OOH expenditure shares and divide them among the elementary aggregates of the sub-index;
(b)
the OOH expenditure shares based on data from the year t-2 shall be reviewed and updated to make them representative of year t-1;
(c)
the OOH expenditure shares for elementary aggregates shall be adjusted with an appropriate price change between the year t-1 and the fourth quarter of the year t-1.
3. Sub-index and elementary aggregate weights shall be kept constant throughout the calendar year.
4. The sum of all sub-index weights shall equal 1 000.
5. The sub-index weight shall be equal to the sum of weights for elementary aggregates distinguished within the given expenditure category.
6. Member States shall use stratum weights that are representative of owner-occupiers’ housing expenditure that belongs to the target universe of the OOH price index in the comparison period, or in any period that precedes the current year by no more than 2 years.
Weights reflecting the level of owner-occupiers’ housing expenditure
Member States shall derive total OOH weights reflecting the level of owner-occupiers’ housing expenditure by determining the sum of all categories of owner-occupiers’ housing expenditure in the year t-1.
Purchases of newly built dwellings and existing dwellings new to households
1. Member States shall obtain the OOH sub-indices for purchases of newly built dwellings and existing dwellings new to households in accordance with paragraphs 2 to 12.
2. Member States shall acquire the basic information needed for the definition of the strata or elementary aggregates, or of both, and the compilation of the sub-indices referred to in paragraph 1.
3. Member States shall ensure that data collection covers relevant price-determining characteristics that enable the compilation of a price index that is unaffected by quality differences between transacted dwellings.
4. Member States shall ensure that the data used as a source of information on transacted dwellings is representative of the target universe of each sub-index in each reference period.
5. Member States may exclude from the sub-indices referred to in paragraph 1, one or more types of dwelling and one or more regions, provided that the total share of excluded dwellings in the household expenditure on purchases of dwellings belonging to the target universe of the OOH price index does not exceed five parts per hundred. Expenditure on purchases of dwellings for excluded types of dwelling or regions shall be allocated to the most similar type of dwelling or region.
6. The sub-indices referred to in paragraph 1 shall be based on transaction prices of dwellings. A transaction price of a dwelling shall be included in those sub-indices for the quarter in which the legal ownership of the dwelling is transferred from the seller to the buyer.
7. Member States shall obtain the sub-indices referred to in paragraph 1 using one of the following options:
(a)
as an aggregation of stratum indices calculated either as hedonic indices or indices based on a method that replicates the matched model approach;
(b)
as hedonic indices or indices based on a method that replicates the matched model approach;
(c)
as a stratified median or mean index.
8. Where a Member State uses a hedonic index, it shall ensure that the applied method controls for quality differences between transacted dwellings in the comparison and reference periods.
9. Where a Member State uses a method that replicates the matched model approach, it shall ensure that matched price comparisons are made for the same dwellings in the comparison and reference periods, in such a way which ensures that quality differences between transacted dwellings are controlled for.
10. Where a Member State uses a stratified median or mean index it shall determine stratification variables on the basis of statistical analysis and ensure that the defined strata are sufficiently homogeneous.
11. Where the available number of transacted dwellings is insufficient to enable the calculation of a reliable price index for a certain stratum, Member States shall estimate the price change for that stratum as the price change for a stratum or a combination of strata characterised by comparable market conditions.
12. Member States shall not carry forward the previous quarter’s prices or impute the same price change as in a previous quarter, unless it can be justified as an appropriate estimate.
Self-build dwellings and major renovations
When compiling the OOH sub-index for self-build dwellings and major renovations, Member States shall take into account the specifics of the construction process and in particular the following elements:
(a)
where households undertake the work themselves and purchase only the materials, the price index shall be based on prices of purchased materials;
(b)
where households involve building firms, the price index shall be based on the producer price index for construction adjusted for possible changes in value added type taxes rates applicable to households. Where the producer price index for construction is not available, the index shall be based on a sample of products and suppliers taking into account the types of constructed dwellings and materials and services used;
(c)
where households purchase a prefabricated dwelling, the price index shall reflect changes in prices of prefabricated houses, delivery costs and prices of purchased construction works.
Other services related to the acquisition of dwellings
1. Where the price of a service is determined as a proportion of the transaction price of the dwelling, the price index for the service shall be based on that proportion multiplied by the price of a representative transaction.
2. The change in the price of a representative transaction shall be estimated by using the HPI or an appropriate sub-index of the HPI.
Application of articles 19 to 25
1. Articles 19 to 25 shall apply where elementary aggregates of any sub-index of the OOH price index are compiled from observed prices that are collected specifically for that purpose.
2. Articles 19 to 25 of this Regulation shall not apply where the elementary aggregates referred to in paragraph 1 are covered by Article 15 of this Regulation.
Sampling and representativity
1. Member States shall make a target sample for the OOH price index that is representative of the target universe of the OOH price index by defining elementary aggregates and selecting individual products for those elementary aggregates.
2. The number of individual products and elementary aggregates shall depend on the weight of the expenditure category and the variance of price movements of the individual products belonging to it.
3. Member States shall ensure that the target sample for the OOH price index remains representative of the target universe of the OOH price index over time by conducting at least an annual review and update of the target sample for the OOH price index, and selecting replacement products.
Treatment of prices
1. Member States shall use observed prices to compile the OOH price index. They shall use estimated prices only for the purposes laid down in Articles 22 and 24.
2. Observed prices for the sub-index ‘insurance connected with dwellings’ shall be actual premiums.
3. Where a product related to the acquisition or the ownership of dwellings has been made available free of charge and a price is subsequently charged, it shall be shown as a price increase in the OOH price index. Conversely, where a price has been charged for an individual service that is subsequently made available free of charge, it shall be shown as a price decrease in the OOH price index.
Discounts and inducements
1. Member States shall take account of discounts that:
(a)
can be attributed to an observed individual product; and
(b)
can be claimed at the time of purchase.
2. Where possible, account shall be taken of discounts that are available only to a restricted group of purchasers.
3. Inducements shall be treated in accordance with Articles 23 and 24.
Estimation of prices
1. If the price of an individual product in the target sample for the OOH price index cannot be observed within the reference quarter, an estimated price shall be used only for that quarter, after which a replacement product shall be selected. This paragraph shall not apply to individual products that are expected to become available again.
2. A previously observed price shall not be used as an estimated price unless it can be justified as an appropriate estimate.
Replacements
1. Member States shall select a replacement product that is similar to the disappearing product, while ensuring that the target sample for the OOH price index remains representative.
2. Member States shall not select replacement products on the basis of a similar price.
Quality adjustment
1. If there is no difference between a replaced product and its replacement in terms of their characteristics, timing, place of purchase or terms of supply, Member States shall compare the observed prices directly. Otherwise, Member States shall make a quality adjustment.
2. Member States shall make a quality adjustment equal to the whole price difference between the replaced product and its replacement only if this can be justified as an appropriate estimate of the quality difference.
Elementary price index
1. The prices of individual products shall be aggregated to obtain elementary price indices using either of the following options:
(a)
an index formula that ensures transitivity. The price index of prior periods shall not be revised when using transitive index formulae; or
(b)
an index formula that ensures time reversibility and compares the prices of individual products in the comparison period with the prices of those products in the reference period. The reference period shall not be changed frequently if such change leads to significant violation of the transitivity principle.
2. An index formula that is consistent with those described in paragraph 1 shall be used to obtain a price index for an elementary aggregate from two or more elementary price indices.
Integrating sub-indices after the index reference period
Any sub-index that is integrated into the OOH price index after the index reference period shall be linked to the last quarter of a particular year and used as from the first quarter of the following year.
Source: EUR-Lex (Publications Office of the EU), © European Union, reuse permitted under Commission Decision 2011/833/EU.
