The quality-adjusted price evolution of houses and apartments in Flanders from 2005q1 until 2021q2

Abstract

I construct a quality-adjusted hedonic house price index for Flanders from 2005q1 until 2021q2. I use data from a large franchise network of real estate brokers with transactions from 37,850 houses and 12,200 apartments. The results indicate that the average yearly nominal house price growth was equal to 4.6% (2.1% after inflation). However, the yearly growth rate differs substantially in different sub periods with above average growth rates in 2005-2008 and 2017-2021 while nominal price growth was in line with inflation from 2009 until 2016. The price evolution of apartments is very similar to houses. In addition to a hedonic price index, I also calculate the evolution of the time-on-market and sale-to-list ratio as new indicators to assess the housing market. Looking at the impact of the COVID-19 crisis on the housing market, we see that house prices increased faster outside central cities since the second half of 2020. For apartments, there is a strong increase in the price of apartments at the coast and a strong decrease in the time-on-market of apartments with a terrace in comparison to apartments without a terrace. It is, however, too early to conclude whether or not these changes are temporary or permanent. The indices and indicators that I construct are available on my website www.svendamen.com/hedonic and updated every year in January.

Keywords: Hedonic price index, time-on-market, sale-to-list ratio, Flanders