The article aims to examine why residential property price indices (RPPI) are important, particularly in the European Union (EU) with its highly integrated financial system and examines the problems in developing a pan-European price index that aggregates the indices of different countries.
The reasons why RPPI are important is explored through a review of the literature on residential price bubbles and the issues with the indices through studies of individual examples.
Financial integration in the EU has taken place without adequate consideration having been given to diversity in residential property markets. The development of means of monitoring them has lagged behind integration with the national price indices using a variety of methods and approaches to data that limit the extent to which they can be aggregated.
The article shows the need for better quality data about house price trends in Europe if the consequences of future bubbles are to be avoided. Current initiatives are unlikely to satisfy this, as they leave too many choices about methodology and data in the hands of individual countries.
Grover, R. and Grover, C. (2014), "The role of house price indices in managing the integration of finance and housing markets in the European Union", Journal of European Real Estate Research, Vol. 7 No. 3, pp. 270-294. https://doi.org/10.1108/JERER-02-2014-0013
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