HOUSE PRICE INDICES

NOTES ON METHODOLOGY

Legal basis and notes on methodology

The legal basis for calculating and transmitting data on the house price index is defined in Regulation (EU) 2016/792 of the European Parliament and of the Council of 11 May 2016 on harmonised indices of consumer prices and the house price index, and repealing Council Regulation (EC) No 2494/95, and Commission Implementing Regulation (EU) 2023/1470 of 17 July 2023 laying down the methodological and technical specifications in accordance with Regulation (EU) 2016/792 of the European Parliament and of the Council as regards the house price index and the owner-occupied housing price index, and amending Commission Regulation (EU) 2020/1148. According to the Commission Regulation (EU) 2023/1470, the coverage of house price index expenditure categories is defined for newly built and existing dwellings as well as for the category of total at the level of the Republic of Croatia. The Croatian Bureau of Statistics has defined additional three geographic areas in order to meet users’ needs – the City of Zagreb (the capital city), the Adriatic coast and Other. The calculation of house price index is in accordance with the methodological guidelines of Eurostat's "Handbook on Residential Property Price Indices – RPPI".

Coverage

The house price index measures the change in the transactions of dwellings made by households independently of their previous owners and independently of their final use. Transaction prices include the value of land.

The house price index covers all available data on dwelling transactions (houses and flats/apartments) on the territory of the Republic of Croatia, expressed in euro, that are delivered by the Tax Administration of the Ministry of Finance according to predefined deadlines.

The main data source for calculating the weights is the value of dwelling transactions from the previous year. The weights were recalculated on the basis of changes in the prices of dwellings in the last quarter of the previous year.

Index calculation method

The index calculation starts with pre-defined hedonic regression models, whose variables are defined on the basis of available data on dwelling characteristics. Until the end of 2011, the standard time-dummy hedonic regression was used in the calculation of indices, while since the first quarter of 2012, they have been calculated by using the rolling window time-dummy hedonic regression due to the availability of extended set of dwelling characteristics data. These indices are then aggregated to higher levels and the level of total by using the Laspeyres-type formula.

ABBREVIATIONS
EC	European Community
EU	European Union
Eurostat	Statistical Office of the European Union