At a recent European Commission sponsored real estate conference in Luxemburg, statisticians demonstrated that there was a difference of about six months in the lead-lag timeframe when indices are constructed using the hedonic model, as compared to the commonly used “Repeat Sales Method”.
The data covered a period of three decades from Japan to Poland, in a study encompassing 26 markets. The conclusions were of little surprise to most members in the audience, and data providers as well as banks are increasingly turning towards the more rigorous hedonic methodology in most developed markets.
