Abstract: In order to improve the measurement of property price inflation, we studied various methods of compiling housing price indices in the world, and constructed the Megacity Housing Price Index (MHPI) for selected Chinese cities employing the hedonic method. Compared with the traditional housing price indices based on non-homogeneous methods, housing price indices using the hedonic method can reduce distortions due to changes in property features such as quality and location, and thereby more accurately reflect the trend of housing prices. Compared with the repeat sale method, the hedonic method can avoid problems such as distortions to transaction prices in the secondary market. In this research project, we compiled the monthly housing price indices (from January 2007 to December 2010) using the hedonic method for new residential properties for 22 major cities, and developed a composite MHPI for these cities. Our analysis shows that the price trend depicted by the MHPI better reflects the actual experience of the residents than other indices, and is better correlated with selected macroeconomic indicators..

Full report :Constructing Housing Price Indices Using the Hedonic Approach.pdf