Eurostat, the statistical office of the European Union

Eurostat, C1, National accounts methodology. Indicators

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The deflated house price index (or real house price index) is the ratio between the house price index (HPI) and the national accounts deflator for private final consumption expenditure (households and non-profit institutions serving households (NPISHs)). This indicator therefore measures inflation in the house market relative to inflation in the final consumption expenditure of households and NPIs.

Eurostat HPI captures price changes of all residential properties purchased by households (flats, detached houses, terraced houses, etc.), both new and existing, independently of their final use and their previous owners. Only market prices are considered, self-build dwellings are therefore excluded. The land component is included.

The MIP scoreboard indicator is the year-on-year growth rate of the deflated house price index. In the MIP domain are also published annual and quarterly figures on:

• House price index, deflated – average index and rate of change
• House price index – average rate of change, index and % change T/T-3

The HPIs are classified according to the following categories

H.1. Purchases of dwellings

H.1.1. Purchases of new dwellings

H.1.2. Purchases of existing dwellings

European System of Accounts, 2010 edition (ESA 2010) sector S.14 (Household sector). HPIs cover all residential properties purchased by households in the reference period.

The MIP scoreboard indicator is House price index, deflated (1 year % change) with an indicative threshold of 6%. The scoreboard indicator is calculated using the formula: [((HPIt / DEFLt ) – (HPIt-1 / DEFLt-1)) / (HPIt-1 / DEFLt-1)]*100.

Emphasis is on market prices of residential properties, non-marketed prices are ruled out from the scope of the HPI; so self-built dwellings are excluded. All transactions are included (both cash and mortgage). Focus is on:

• The measurement of price developments of all residential properties purchased by households, independently of its final use; so dwellings bought by households for uses other than owner-occupancy are included (for investment, e.g. to rent it out).
• The dwelling acquisitions, independently of its previous owner; so all purchases of new and existing dwellings are to be considered, including those existing dwellings transacted between households.

Each published index or rate of change refers to the expenditure by the household sector for acquiring residential property in the corresponding geographical entity. Expenditure includes all acquisitions of residential property, covering transactions with other sectors and transactions that are internal to the household sector.

The target statistical universe is the household expenditure for the acquisition of residential property within the economic territories of the countries compiling the HPI. The households sector (S.14) to which the definition refers includes all individuals or groups of individuals irrespective of, in particular, the type of area in which they live, their position in the income distribution and their nationality status. These definitions follow the national account concepts in the European System of Accounts, 2010 edition (ESA 2010).

HPIs comprise all dwellings purchased in monetary transactions by households within the territory of a country; those by both resident and non-resident households (i.e. 'domestic concept').

The MIP scoreboard presents data for each EU Member State, as well as euro area (EA) and the European Union as a whole

At the country level the length of the time series is variable, going back to 2000. For details on time coverage see the respective tables: tipsho10; tipsho20; tipsho30; tipsho40

HPIs are chain-linked Laspeyres-type price indices published using a common index reference period (2015=100).

Starting with the release of Q1 2017 data on 19 July 2017, the reference year of the HPI series has been changed from 2010=100 to 2015=100.

The following units are used:

• Index: equal 100 in the base period. For any other period, the HPI can be reckoned of as the amount that the buyer would have to spend on average in that given period to buy a residential property having a value of 100 in the base period.
• Percentage change on the same period of the previous year (rates)
• 3-year % change

For every quarter, national indices are compiled by NSIs based on data for dwellings that were transacted during that quarter in each EU Member State. The compiled quarterly indices represent the whole calendar quarter.

The basic act providing for the compilation of the House price index (HPI) is the European Parliament and Council Regulation (EU) 2016/792, of 11 May 2016. The basic act is implemented by Commission Regulation (EU) 2020/1148 of 31 July 2020.

All relevant regulations as well as further methodological details could be found in the HICP dedicated web section on Eurostat's website under Legislation.

The indicator House price index forms part of the Macroeconomic Imbalance Procedure (MIP) Scoreboard headline indicators set up under Regulation (EU) No 1176/2011 of the European Parliament and of the Council.

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The Regulation 2015/759 of 29 April 2015, amending Regulation (EC) No 223/2009 on European statistics of 11 March 2009 [(recital 24 and Article 20(4))], stipulates the need to establish common principles and guidelines ensuring the confidentiality of data used for the production of European statistics and the access to those data.

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The HPIs are released on a quarterly basis - one quarter after the reference period.

A release calendar for MIP scoreboard indicators is not available. The quarterly source data are published in accordance with the Eurostat release calendar.

The MIP Regulation stipulates that “The Commission shall make the set of indicators and the thresholds in the scoreboard public.” (Art. 4, paragraph 6, Regulation (EU) No 1176/2011 of 16 November 2011 on the prevention and correction of macroeconomic imbalances) and that “The Commission shall update the values for the indicators on the scoreboard at least on an annual basis.” (Art. 4, paragraph 8).

In line with the Community legal framework and the European Statistics Code of Practice Eurostat disseminates European statistics on Eurostat's website (see item 10 - 'Accessibility and clarity') respecting professional independence and in an objective, professional and transparent manner in which all users are treated equitably. The detailed arrangements are governed by the Eurostat protocol on impartial access to Eurostat data for users.

The MIP related indicators are updated and released in accordance to the dissemination of the underlying data on a quarterly and annual basis.

News releases on-line.

The indicators are part of the MIP Scoreboard used to identify emerging or persistent macroeconomic imbalances in EU countries. The Scoreboard is part of an annual exercise, where the first step is the compilation of an Alert Mechanism Report (AMR).

See data availability for the different tables: tipsho10; tipsho20; tipsho30; tipsho40

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See Eurostat's Eurostat Housing price statistics website.

The HPIs are compiled based on a common methodological framework.

An analytical, in-depth review of the methods is offered in the  Handbook on Residential Property Prices Indices (RPPI). The Handbook represents the first comprehensive overview of the conceptual and practical issues that statisticians (both in industrialized and developing countries) should consider when compiling price indexes for residential properties.

Eurostat's mission is to provide the European Union with a high-quality statistical information service - see Eurostat quality framework.

Moreover, the statistics underlying the Scoreboard indicators are subject to a specific quality assurance framework developed within the MIP context.

Eurostat and National Statistical Institutes are working to ensure that the statistical practices used to compile national HPIs are in compliance with HPIs methodological requirements and that good practices in the field of house price indices are being followed, according to the methodology underlined in the RPPI Handbook.

Eurostat has developed together with the Member States a framework to assess the quality of the HPIs, where the concepts in the RPPI Handbook are combined with the European Statistical System (ESS) quality dimensions. This harmonised framework aims to maintain and, where necessary, improve current practices, taking into account the country-specific conditions.

Data are collected from reliable sources applying high standards with regard to the methodology and ensuring high comparability.

The quality of the HPI is assessed regularly using the quality assurance framework. Evaluations undertaken by Eurostat in cooperation with Member States have revealed that the quality of HPIs can be regarded as appropriate and significantly improving over time.

The quality assurance framework for the Macroeconomic imbalance procedure (MIP) follows a three-level structure:

The first level assesses the reliability and comparability of MIP underlying statistics and addresses relevant quality issues; it also enhances the communication on quality assurance of MIP statistics towards the European Parliament and Council, policy makers and the public at large. This level draws on the information gathered in levels two and three (see below).

The second level consists of domain-specific quality reports produced by Eurostat and the ECB summarising the main findings for the euro area or the EU Member States. Reports assess the underlying compilation process and its robustness, describe its legal basis and evaluate whether the statistics are in line with international statistical standards.

The third level consists of national quality reports (self-assessments) produced by the institution compiling the national statistics. Most of these reports are voluntarily published by Members States on the CMFB’s website and their availability depends upon the statistical domain.

The deflated House price index is one of the headline indicators of the MIP Scoreboard. The MIP Scoreboard is used as an early warning system in the context of the macroeconomic surveillance of the EU Member states. The MIP Scoreboard consists of a set of fourteen indicators, covering the major sources of macroeconomic imbalances. The aim of the scoreboard is to trigger in-depth studies, which will do analyses to determine whether the potential imbalances identified in the early-warning system are benign or problematic.

The HPIs can be considered suited for cross-country economic comparisons of the evolution of house prices. They have a variety of potential uses:

• assessing housing affordability over time
• a measure of specific price trends
• inflation targeting
• monitoring economic imbalances and financial stability
• as input for national accounts purposes, economic forecasting and analysis, decision making in respect of the house market

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The lengths of series vary according to the EU Member states. The Introduction part of the Statistical annex of each Alert mechanism report provides detailed information on data completeness. 

The accuracy of source data is monitored by assessing the methodological soundness of price and weight sources and the adherence to the methodological recommendations. There is a variety of data sources both for weights (National Account data, Household Budget Survey data, Construction Statistics, etc.) and prices (administrative data, bank data (mortgages), construction companies, real estate agents, etc.).

The data collection depends on the data sources used across Member States - e.g. administrative data, surveys. The type of survey and the price collection methods are designed to ensure sufficient coverage and timeliness.

Another potential source of bias can be related to the price concept used. The HPIs produced by Member States generally use transactions prices, ideally measured at the first binding contract. This is in line with the objective of the HPI to measure the evolution of actual transaction prices as experienced by buyers and sellers. Nonetheless, even transaction prices (as recorded in administrative registers, for instance) may, in some cases, be subject to bias (underreporting). Member States are usually assessing the possibility of this bias occurring and if identified, corrective measures are implemented.

In cases where samples are used, HPIs are statistical estimates subject to sampling errors because they are based on a sample of transactions, which is less than the complete universe of all purchases.

The National Statistical Institutes who are responsible for the compilation of national results do not generally produce numerical estimates of HPI sampling errors because they are difficult to quantify. Nonetheless, the NSIs are reducing the sampling errors by using a sample of transactions that is as large as possible, given data and resource constraints.

For the HPIs non-sampling errors are generally not quantified. Eurostat and the NSIs try to reduce non-sampling errors through continuous methodological improvements.

The House Price Indices are released after one quarter from the end of the reference quarter (T+1Q).

The punctuality depends on the delivery of the basic data used for the calculation of the MIP indicators. The HPIs have been published on the agreed release dates, at one quarter after the reference period.

The comparability is ensured by the application of common set of definitions and methods. Due to this harmonisation process, the HPIs released by Eurostat can be considered, among HPIs available in EU Member States, as most suited for cross-country comparisons.

As a key issue for HPIs is the heterogeneity of the housing market, where virtually every product (dwelling) bought and sold is different from the next one in some respect. The quality adjustment from one time period to the next has been a major methodological issue in compiling house price indices, with important consequences for cross-country comparability.

HPI data are considered fairly comparable over time. Nonetheless, because of several improvements in methodology, some breaks in time series exist. In such cases, if basic data allowed, back calculations were performed and historical series were revised.

Information on data, breaks in series, flags are provided in the footnotes, published under each data table.

There is only one set of HPIs available.

HPIs are internally coherent. Higher level aggregations are derived from detailed indices according to well-defined procedures.

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The published HPI data may be revised for mistakes, new or improved information, and changes in the system of harmonised rules.

The HPI data is released quarterly, and they may include some provisional data for the latest quarter. These are usually confirmed or revised to the final figures the following quarter. Major revisions are normally released with explanatory notes.

The change of reference year caused revisions to a few previously published rates of change because of rounding effects. Thus, rates of change for European and country aggregates calculated from the 2015=100 series can differ from the rates calculated from the 2010=100 series.

Data collection is carried out by the Member states in the National Statistical Institutes. Data sources for prices are: administrative data sources, bank (mortgage) data, construction companies, real estate agents, etc. Weights are usually compiled from National Accounts data, Household Budget Survey data, Construction Statistics, etc.

Quarterly for the basic data.

The data collection methods are chosen by National Statistical Institutes, depending on access to data, exhaustiveness, data quality, cost, variables available, timeliness, etc. The Member States' HPIs are supplied by the National Statistical Institutes.

Data validation is done by National Statistical Institutes; additional quality checks are carried out also by Eurostat.

The HPI data are compiled at national level, mainly by National statistical institutes.  For Greece, HPI data are compiled from the quarterly index of apartment prices available at the Bank of Greece.

Eurostat backcasted the missing annual figures for some countries, using econometric techniques (delta logs with OLS). The proxy variables were official data provided either by the ECB or by the national central banks.

The backcasted time series are published in the MIP data tables, after the approval of the relevant NSIs. The target series are with a reference base year 2015=100 covering at least the last 10 years.

For more information on the backcasted data please message the MIP team functional mailbox: ESTAT-MIP@ec.europa.eu

No seasonal adjustments are made.

Adjustments for quality mix and quality change: As HPI aims at measuring 'pure' price changes, it should be unaffected by changes in quality of residential properties. In the process of index compilation, National Statistical Institutes control for variations from one quarter to the other in the amounts of the price determining characteristics of the properties.

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